Dying by Rules: The Revelation of Dalian Machine Tool’s Decline

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The only constant in this world is change, and what maintains that change are two words – “rules”. From as small as a nucleus to as large as a galaxy, rules are nowhere to be found yet present everywhere; like a form of divine punishment, they always strike suddenly when we become overconfident. 　　1. Absolute power only leads to absolute **. In a company, once the powers of those in positions of authority are not constrained by rules, commercial **inevitably follows. Rules can be overridden, altered, or ignored; there are many different ways to enforce rules, yet they all boil down to one thing: enforcing them with higher-level rules. Only by clearly distinguishing between responsibilities, powers, duties, and interests can ** be minimized to the greatest extent possible. After all, according to the **law of business conservation**, it cannot be eliminated; it merely shifts from one sector to another, or changes from one form to another... Ahem... I'm getting off track here. 　　Returning to Dalian Machine Tools, the latest case of 600 million yuan in fraudulent loans has now ranked second in the Baidu search results for the term “Dalian Machine Tools”. (By the way, our company’s website has been around for a while now, but it’s still buried under \"ads\". ) Why are it always the corporate executives who get into trouble? Because the rules are imperfect and there is a lack of oversight mechanisms ； Because it’s profitable, onlookers choose to turn a blind eye ； Because people in this country are superstitious about power and dare not say No to executives! …… 　　Well, the reasons mentioned above do seem plausible, but then who can explain how a cashier at Dalian Machine Tools was able to squander 17.1 million yuan of the company’s funds? Who gave him the courage? Jiang Jingru? Then who gave him the opportunity? Are the bosses of companies who establish financial systems all idiots? 　　Speaking of this, I recall an interesting experience – it’s completely true, but it sounds like a joke. A startup started from scratch; due to the lack of appropriate systems, it hired a few people with good relationships and experience to act as managers, allowing them to establish departmental rules on their own—including financial policies. Yes, you heard that right – let the finance staff create their own systems to hold themselves accountable. What happened later? I left the job later on. As for how much money I made? Who knows. 　　2. Performance is not an end in itself but a means. There are two purposes to performance: one is the explicit one—quantitative assessment, and the other is the implicit one—resolving conflicts. There’s no need to elaborate on quantitative assessment; various bestsellers on management topics praise \"performance\" highly – but don’t the authors themselves have some idea as to whether this approach actually works or not? As for resolving contradictions, it involves many disciplines such as politics and psychology. For example, in a company with one boss and two employees, the amount of bonuses given depends entirely on the boss’s mood. Those who receive less in bonuses must surely feel resentful toward their bosses—a conflict between superiors and subordinates that is extremely difficult to resolve; a single wrong word could lead to them driving away... ugh... it could even result in them throwing a tantrum. And once a performance evaluation mechanism is established in institutional form, this contradiction splits into two secondary contradictions: competition among colleagues, and the \"human-machine\" conflict between employees and the system. In case of conflicts among colleagues, leaders can take a neutral, \"fair\" stance as an outsider and use a combination of incentives and consequences to mediate the situation (mastering the art of making promises) ； As for the conflict between humans and machines, leaders who establish or adopt \"stupid policies\" are labeled as fools by their employees, but it doesn’t cost them anything in terms of benefits… So, I’ve always thought that performance evaluations are a derivative of The Comprehensive Mirror to Aid in Government. 　　Returning to the topic of Dalian Machine Tools, even before its commercial **problems became apparent to the public, various issues were already extremely serious; the most prominent one was the problem with production efficiency. Dalian Machine Tools uses annual performance assessment targets as the basis for determining salaries and bonuses, while the order completion rate is inexplicably ignored. The machine tool industry is a very special one; many customers request minor modifications, and this is even more true for bulk orders. Renovation means spending more time, so the production department decisively chose – no renovation! As for whether the market will accept it? Who cares? 　　Thus, a strange situation arose: on one hand, the sales department had a large number of orders but no finished products to deliver, while on the other hand, the production department was overloaded with a large stock of low-end standard products. I once believed that environmental policies had restricted the casting industry, resulting in prolonged production cycles for machine tool beds, which in turn led to significant delays in delivery times for Dalian Machine Tools. Yet once inside this “mysterious” machine tool company, reality dealt a harsh blow: environmental policies pointed to the backlog of conventional machine tools, making it clear that they would not take responsibility for those issues. 　　Performance is a powerful tool for raising the revenue curve within a certain range and balancing internal conflicts within a company; however, if it is used beyond those limits, it will inevitably backfire. 　　3. Vision and ambition are two different things. To be honest, I was quite surprised when Dalian Machine Tool introduced a plan for renting CNC machines – Sany Heavy Industry had previously implemented a similar plan for its construction machinery, with good results. To be precise, the plan was a good idea with successful precedents – so why did it still fail? The timing for entering was wrong! 　　Construction machinery is used for rough work; relatively speaking, as long as the task is completed, it’s fine, and precision requirements are not that strict. CNC machines rely on precision to function, and no owner would take the risk of trying a new operating system. On the surface, the leasing plan appears to have no cost, but in reality, significant investments are required for things such as plant layout, power supply, foundation construction, as well as cutting tools and materials. With mature imported systems available, why would bosses take the risk of trying something new? Introducing a new system shouldn’t be done in this way; it’s better to learn from Autodesk’s approach. Start by targeting students at universities. Once the fresh blood in the industry bears the mark of \"Dalian Machine Tools,\" then it’s the right time to introduce one’s own leasing program. 　　Whether one has a broad vision or ambitious goals, the rules of business are the minimum standards that companies must adhere to. The true foundation for a company’s development lies in the value gap created by technological advantages, rather than using price advantages resulting from volume to eliminate competitors. Beyond the surface of Dalian’s machine tool leasing program, it is evident that its true intention is to attempt a monopoly over the mid- and low-end markets. Eating meat by oneself is certainly possible through one’s own skills, but preventing others from drinking soup is a really ugly behavior. 　　4. The improper relationship between technology and capital Entrepreneurship is becoming increasingly difficult, not only because we face technological barriers, but also because we are utterly insignificant in the face of capital. A new game idea that’s only meant to generate quick profits – soon, imitators will swarm in like flies attracted to carrion or maggots clinging to bones; in the face of sheer capital, the skills we possess seem utterly insignificant. The once-popular Happy Farm met its tragic end for this reason; the same is true today with the widespread popularity of battle royale games. The machine tool industry follows a similar pattern to the gaming industry. 　　Shareholding, mergers and acquisitions, financing... no matter what the methods, what’s lost is still lost. If losing one’s business sign is a sign of decline for the children of wealthy families, what about losing one’s skills? I’m afraid it’s a situation with no way out. In fact, if you have paid attention to industry news, you will notice that while Dalian Machine Tools was struggling severely during that period, foreign-owned machine tool manufacturers in China as well as private small-scale machine tool factories were thriving – this is what it means to make big profits quietly. For Dalian machine tool manufacturers, the real problem was that surrounding companies poached a large portion of their technical staff; as a result, the machine tool industry in regions such as Dalian and Shandong saw steady improvements in its technical capabilities. For machine tools, materials and technology are eternal topics; while materials can still be addressed to some extent through capital, technology can only be resolved by human effort. The loss of talents with several years, a decade or even decades of experience represents an irreparable loss for both northern machine tool manufacturers and the domestic machine tool industry as a whole. Postscript: Commercialism is an injury that only needs to be stitched up; poor performance is an easily treatable skin condition; excessive ambition is an internal injury that requires time to recover. Yet the loss of technical talent is a terminal illness akin to multiple organ failure, one for which even vast amounts of money cannot find a cure. I only hope that after achieving nirvana, Dalian Machine Tools will be able to abide by the rules and truly be reborn. 　　　　　　　　　　　　　　　　　　January 29, 2019, in Dalian