March 17, 2018
At the recent China Development Forum, Lei Zhang, being both an investor and an entrepreneur, shared his philosophy of corporate innovation and technology empowerment and how they are practiced at Hillhouse.
The discussion was led by Lei Zhang, founder and CEO of Hillhouse Capital, and among the guest speakers were Meng Li, Vice Minister of Science and Technology, Alex Gorsky, Chairman and CEO of Johnson & Johnson, Qiren Zhou, Professor of National School of Development at Peking University, Doug DeVos, President of Amway Corporation, Keith Williams, President and CEO of UL, and Mark Wilson, CEO of Aviva.
When discussing how to practice innovation with a continually evolving understanding, Lei Zhang introduced a new concept of “Innovation 2.0” — he believes that the era of “Innovation 1.0,” which relies on opportunistic business models and innovation, has passed, and now is the era of “Innovation 2.0.” In this era, technology is no longer only a disruptive factor as in the past business model where “winners take it all,” but an empowering and rebalancing force that helps traditional industries transform, upgrade, and enables more companies to catch the fast train to technical prowess.
On the topic of how current industry leaders shall meet the challenges of the new business revolution, Lei Zhang invited the industry guest speakers in the session to share how they see outstanding companies to maintain their innovation capabilities amid the challenges from new tools and new business models, from the perspectives of industry ecosystem, business operation, and corporate management and culture.
Mr. Gorsky pointed out that a common mistake made by big companies is that they tend to be overconfident and believe their ideas are the best. However, in reality, for Johnson & Johnson, the real focus of the company should be on figuring out what patients and customers need the most, and then mobilizing all the resources – whether through independent research and development or through external mergers and acquisitions – to meet such needs. Otherwise, the company is not far from being disrupted.
Mr. Williams said that innovation has its ultimate roots in the culture of the company. Many times, start-up companies are in better positions for innovation than industry leaders because it is easier for start-up management to demonstrate and promote entrepreneurship in the company. On this point, Lei Zhang said that in his countless interactions with entrepreneurs, he has summed up two of the most critical points of corporate innovation. Firstly, a company would need to build a learning organization; and secondly, it must have an excellent corporate culture. Such corporate culture is neither a “family culture” where you scratch my back and I’ll scratch yours, nor a “wolf pact culture” that sees everyone around as a competitor. A good corporate culture should be a “sportsmanship culture,” which features a sportsman’s spirit of competition and a sports team’s spirit of collaboration. Such a culture requires one to stand up after every fall, learn lessons, and continue to improve. Echoing Lei Zhang’s idea of technology enablement, Mr. DeVos cited the example where Hillhouse led the privatization of Belle and proposed to lead its 120,000 employees to share the fruits of business innovation.
On how the education system should train talents and how the government should encourage innovation, Professor Qiren Zhou and Vice Minister Meng Li made speeches, respectively. From the perspectives of talent training and government policy, Professor Zhou and Vice Minister Li expounded the importance and path of entering the unexplored fields of study and research. Vice Minister Li stressed that in supporting innovation, the government, on the one hand, has been committed to cutting-edge scientific exploration by establishing the National Natural Science Fund, sending “pathfinders” to the unexplored fields, and developing a deep-sea “space station” and an on-orbit servicing system; on the other hand, the government implements policies to encourage innovation and protect the intellectual property rights of individuals and businesses, actively guiding and supporting new industrial reforms.
The session was filled with lively discussions and frequent interactions between the host and the guest speakers. Towards the end of the discussion, Lei Zhang summed up as the host and concluded that in the tide of technological innovation and the new business revolution, the human factor should not be forgotten, and entrepreneurial spirit should not be absent. A great entrepreneur would also be a good educator, who inspires and encourages others with positive and innovative attitudes and practices. Development in the future will be driven by innovation, and it should feature openness and mutual benefits. When entrepreneurs promote the transformation of the traditional industries and business models, it becomes a process for them to constantly enhance their understanding and improve the application of new technologies. With the open and innovative entrepreneurial spirit, companies will be able to achieve true technological empowerment and value creation.