It’s been a crazy busy week and I’m so glad it’s weekend soon!!
Today I want to reflect a little about Chinese philosophy + how to tell the difference between hyped up and legitimate business models. To have more background knowledge, here is my post on what “business” is to a Chinese person, and why Chinese philosophy states that human beings are actually rather predictable.
So I am going to post about my interpretation of what The Book of Changes (I-ching) informs us about the difference between a “hyped-up” VS a “legitimate” business model. This is part of an extremely simple but useful interpretation of a Chinese philosophy module in my business mentor Raymond Ng’s class.
There are three important premises to business models, according to Chinese philosophy/ folks. The premises may be controversial, but is simply what I-Ching says.
1. I-Ching encourages decisions about “what is”, not “what should be”. This means that according to the I-Ching, a smart business person rationally makes decisions on “what is”, and not “what is promised” or good old media rhetoric.
- “What is”: Foreigners are required to learn language X before they get an entry-level job in a particular country. Even so, it is not guarenteed that they will have good career progression even if they work really hard, relative to other countries.
- “What should be”: Since a particular country says in the media that they are “international” and welcome “foreign talent”, a job-seeker should eventually expect change in the policy of making it easier for foreigners to work their way up the career ladder. This includes the policy of making the working language in all companies English. Well, or so “they say”.
Obviously, if you keep making decisions based on “what (the media says) should be”, there is a good chance you might end up deluded.
2. I-Ching encourages people not to fight the system. Instead, go around/about it.
The logic is as follows: Which is easier to change, YOU or the SYSTEM?
If you try to change the system, there is a high chance that (1) Nobody cares, and (2) your efforts might fail. Even if you eventually cause a ripple in the system, this can take 100years.
How many years do you have to live?
This has business implications, because when you go to a pitch and hear an investor say “Oh our business model will disrupt the market because we are exceptional”, you have to be very cautious. Because any “disruption” is by default fighting the system, which will naturally invite a huge backlash by the very powers maintaining the current system.
3. In order to have a successful business model, I-Ching states that it is necessary to have a balance between the changing and the unchanging. Two of the 64 critical concepts in I-Ching are “Kun” and “Qian”. The interaction between “kun” and “qian” in a business model will result in a concept known as “emergence”, which is a positive energy that leads to the great growth of any company.
- “Kun” (坤) refers to something that is “unchanging”, “cautious”, “systematic”, “planned”, “dark”, “quiet”, “boring”.
- “Qian” (乾) refers to something that is “creative”, “full of energy and ideals”, “visionary”, “talkative”, “vibrant”.
I-Ching states that a successful business model requires both “Kun” (坤) and “Qian” (乾).
So how do you tell if a business model is a “hype” or something “legitimate”? In any business model,
- Generally could be thought of as “costs”. These costs include production capabilities, wages, given technology, sunk costs in factories and machines, physical and IT infrastructure etc.
- Therefore, sunk production costs, great coders, IT and physical engineers, extensive planning and risk averse culture fall under “Kun” (坤).
- Generally could be thought of as “revenue”. Contributing towards this is a strong visionary leader, the Public Relations/ Communication /Marketing arm of a company, the innovation and design department, and people who are “anyhow”.
Now, a legit business model would look something like this:
- “Kun” (坤) + “Qian” (乾) = Basic Building Block
For expansion of business, you need to add on either another “Kun” (坤) or “Qian” (乾) or another basic building block.
- Basic Building Block + “Kun” (坤) = X
To continue X, you cannot add a “Kun” (坤) because the last block is already a “Kun” (坤). Think of the addition of a chain like a magnet–you can only add opposites.
So X can only extend if you add a “Qian” (乾) behind the chain, because it adds with “Kun” (坤).
Now, what does this mean?
- This implies that a business model with a strong vision/innovation “Qian” (乾) without actual production capabilities such as labour, factory, technology “Kun” (坤) is not legitimate.
- This also implies that a business model that is focused a lot on actual labour, hours put in, technology “Kun” (坤), without any branding or communication “Qian” (乾) is not legititimate too.
Both are mere hypes, according to the I-Ching. Not only that, if you were to ever launch a business without consideration of “Qian” (乾) and “Kun” (坤) in your business model, you will be subjected to rapid copying.
No wonder the Chinese people are so great at doing businesses. This is quite a useful heuristic, isn’t it? 😀