Chinese Government Says: Innovate

The headline reminded me of the old saw: "The floggings will continue until morale improves"

You can't order innovation. And making it official policy is ineffective to the point of being counterproductive.

But you can use some sneaky ways to get it. As any software metrics researcher will tell you, you always get whatever you measure, so choose your metrics carefully. (I have a long story about that, which I may share on some other occasion if appropriate)

Here, all you need to do is develop some measure/metric of creativity, and watch for anyone who exhibits any sign of that measure (however small), and give the person responsible a small reward -- perhaps a dinner at a moderately nice restaurant for the employee and spouse/friend, or some semivaluable trinket or personal object (this may take some research to find what sorts of things the employee likes to do or collect). Repeat several times, more or less randomly over a period of a few months, seeking out different examples of the desired behavior. Don't repeat the reward to the same person unless there is some really fantastic improvement in the behavior you are trying to encourage/measure. Don't announce what you are doing (except to let the recipient know what s/he did to make you happy), don't give any really big reward, and don't make a big deal or public presentation of it. You will be amazed at the results. Once word gets around, you can actually decrease the frequency of the reward, and it will become even more effective. I have seen this approach work spectacularly in our culture, and I would expect that it could be adapted to Chinese culture.

Innovation exists in China; it comes from the less regulated edges of the economy which depend less on government control and finances to succeed.

This has been true of the online gaming sector, which as developed much faster than in the west. Why? The leading companies are founded by entrepreneurs who got most of their funding from western VCs and private equity firms, not the Chinese government.

Most entrepreneurs anywhere don't like to go for government funding because there are too many strings attached. China is no exception.

Ironically, this will most likely change when western banks are allowed to provide consumer and SME financing in China. Since this money will come with much fewer conditions attached, it should lead to a blossoming of bottom-up entrepreneurial innovation.

The best way for the Chinese government to encourage innovation is to make capital available on an equal basis to all businesses, regardless of whether they are privately or publicly owned.

Paul --

Thanks for checking in.

I completely agree with you. There is innovation in China, just not enough, yet. The innovation is coming mostly from the private sector (along with much of China's growth) and much of that innovation is actually coming from Chinese who were educated in the United States or Europe. Chinese private companies are almost invariably more dynamic than the state owned entities.

I also agree with you that the lack of capital has been holding back innovation in China because the banks generally only lend to state owned companies. I have done a couple posts on this, including how private companies are often forced to raise money from pawn shops and the grey market. My fear is that the Chinese government likes it this way because it does not want to see private companies get too powerful.

The innovation of a country does not depend too much on politics. For example Germany in WW2 and USSR. They were pretty much "top-down" politics, but they were undoubtly creative and innovative. I even think no one had caught up with German innovation in WW2 in modern ages.

It could only be wrong if blaming the Chinese culture. Check with Japan, S Korea and even Taiwan. All share the same culture as Chinese. They can do better.

I think Innovation depends on several things:

1. A good environment and ability for transforming the technology or new ideas to business. The industrial foundation is very important. This could be biggest problem for China. For example for TD-SCDMA 3G wireless standard was setup by Chinese institute and accepted as an international standard, but it takes China a much longer time to implement the idea since China does not has as strong IC design houses as holders of rival standards. It takes some time for a country to set up the strong industrial foundation to serve the innovation.
2. Heavy investment. Innovation cannot come from talking. It is very costy. China's investment in R&D is only 1.3% of GDP, it's too little compared with more than 2% in developed countries.
3. Heavily depends on the point where you stand at. Like climbing a mountain, the higher you are, the more you can see, and more new ideas you can have. In the technology view, China is still at the slope of the mountain and US and other developed countries are at the top. It takes time for China to reach that point. But China is climbing for sure. For example, Chinese telecom companies are more and more competitive in market.
4. Innovation is profitable but costly and risky. China's biggest problem is the banking system that does't want to take that risk. Good thing is the more and more investment from outside VC and fast growing local VCs or companies because of the booming private economy.

I don't know if you caught the article in today's Los Angeles Times that talked about China's sole three digit test for university admisssions - good follow up on this excellent discussion...
http://www.latimes.com/news/education/la-fg-exams18jun18,1,1958176.story?coll=la-news-learning&ctrack=1&cset=true

As a daily witness and participant in the past, I have a more authoritative say than someone else who may otherwise doesn�t.

Recalling from the reminiscence as early as I am possibly able to possess, all my school teachings unanimously surrounded one solitary center-examination. I had been being trained as a test conquering machine since I was in the primary school, which lasted through the junior high school and senior high to the ultimate, most significant occasion: College Entrance Examination held by the National Bureau of Higher Education every year in which millions of Chinese high school graduates must be flocking to participate in order to get the higher education, much more decent education actually, given the facts it is the government that operates nearly all of the famous and prestigious universities and colleges through out the country. For those who failed the examination either by abnormal performance or without the aptitude for tests could only turn to private colleges which are usually money and profits oriented, hence no academic quality guaranteed.

Therefore, the great preparation movement unfolded. There are no classroom discussions, no group seminars, no brain storming at all. All you need to do is attending the lecture, memorizing formulas and equations, learning techniques on cracking questions. Sometimes the preparation schedule is so tight that there is even no time for independent thinking, let alone innovative contemplation. When I was in high school, I usually got up at 6:30 a.m. and slept at 00:30 a.m. on a daily basis, during which I was mainly doing home assignments, exercise books, test papers and poring over books on test tricks and skills and examination cracking. etc. All my fellow classmates led the same life as well with only one thought on mind-crack the god damn exams.

Now the critical point for Chinese students becomes pretty clear and obvious: put in all your resources and aptitude into the test preparation or you will be ending up with either being dropped out prematurely or disqualified and eliminated out of the army of testers marching into the excellent academic institutions. People of my age in China know the importance of the admission examination so well that whether or not they have passed the entrance exam doesn't affect their understanding about it. It�s the fate decisive diversion point in one's life journey, for someone has been heading for being better off whiles others descend to be off better.

Only when the Chinese students are finally liberated can the nation stand a chance of being genuinely innovative.

I found an interesting article written by a communist party member about the need for innovation. The article describes how innovation comes from tolerance of differences---but not individuality.
Here:

The distinction the author is making seems to be an attempt at meeting a propagandistic goal: innovation without democracy, or, in other words, innovation with conformity.

And I agree, tolerance of differences in others implies that another person(s) is different than the norm, which, to me, implies tolerating individuality. So, to me, the distinction is hazy at best.