Companies that take the initiative to admit defeat are good companies

Thread Content

In 1722, at the recommendation of the highly accomplished general Nian Gengyao, Emperor Yongzheng appointed Nuomin as the governor of Shanxi. What faced Emperor Yongzheng at this time was the challenge of recovering the tax payments that local areas owed to the national treasury. Yongzheng, who had just ascended to the throne, seemed to lack the cooperation of local officials, and thus had no way to start collecting the funds from the treasury. Knowing well the will of the emperor, after taking office in Shanxi, Nuomin made every effort and took various actions to repay in full the money owed to the state treasury. Emperor Yongzheng was overjoyed; he ordered the whole country to reward Nuomin, and also conferred upon her the title of \"the greatest governor in the world\". According to the current discourse, Namin is presented as a model of an \"exemplary individual,\" and local officials across the country are urged to follow Namin’s example and return the taxes owed to the state treasury. However, things are not that simple. Tian Wenjing, another minister in Emperor Yongzheng’s trust, subsequently submitted a memorial accusing Nuomin of imposing heavy taxes to fill the treasury, while at the same time using money from merchants to cover those expenses. Upon receiving this impeachment, Yongzheng was in a difficult position. He asked his close advisor Zhang Tingyu for advice, and Zhang Tingyu reminded Yongzheng that he had just issued orders across the country to reward Nuomin; if Nuomin were captured now, it would certainly pose a problem regarding his reputation. After much deliberation, Yongzheng decided to send Tian Wenjing to Shanxi to conduct a thorough investigation. It was found that Nuomin and his subordinate bureaucrats colluded with each other, leading to a deficit of over four million taels in the silver reserves in Shanxi. Enraged, Yongzheng ordered Nuo Min to be executed. Both the ruling party and the opposition were shocked, as Yongzheng personally revoked all the rewards he had given to Nuomin as emperor; he even slapped himself hard. In modern terms, faced with Nuo Min’s criminal acts, Emperor Yongzheng chose to back down, realizing that his own reputation and authority were far less important than the proper functioning of the government and its rules. Face is the immediate issue, while Yongzheng is focused on the long term. It is precisely this kind of mindset that has led to Yongzheng’s current historical reputation as a diligent ruler. The realities of the present can always find parallels in history, and the same is true for business. Youke Jun has met many entrepreneurs, including some well-known figures on the list of the richest people. They share one common trait: regardless of the size of the company or the status of the entrepreneur, those entrepreneurs who are able to achieve long-term success are willing to admit their mistakes. It is quite difficult to achieve this. The logic is the same as when Yongzheng ordered Nuo Min to be executed – giving in is equivalent to humiliating oneself. In their own businesses, entrepreneurs – especially those who are founders – often possess supreme authority. Their subordinates, intentionally or unintentionally, create an image of them as being infallible, with one word of theirs carrying equal weight to ten thousand others. In such an environment, it takes extraordinary courage to admit mistakes and acknowledge one’s own errors. However, “giving in” is actually an external manifestation of “stoplossing”. In business operations, one needn’t fear making mistakes; even the biggest mistakes are not a concern. The fear is that, after realizing the mistake, instead of admitting fault or taking actions to reduce losses, efforts are made to preserve the entrepreneur’s reputation; as a result, the risk exposure only increases, potentially leading to a fatal crisis for the company. Therefore, when entrepreneur friends ask Youke for his opinions and suggestions on a new business venture, Youke always asks them one question: When do you think this business should be stopped and cannot continue any longer? As a result, many people never even thought about this issue. Because in their own businesses and systems, success has become a habit; the idea of giving up has never even crossed their minds. Chinese culture is different from Western culture; the principle that \"a scholar can be killed but not humiliated\" stands in sharp contrast to the Western belief in \"not resisting needlessly at the cost of one’s life.\" This profound cultural influence also affects China’s current business culture, leading to many business tragedies in which companies move further and further down the wrong path. For this very reason, giving in has become a highly valuable spirit in China’s business world. Looking east, across the Pacific, when IBM sold off its PC business to Lenovo, he remained in his position as the leader, even though the business was no longer as profitable. In the eyes of Chinese businessmen, this isn’t even considered a mistake. Yet IBM decided to back down, and did so in its capacity as a ‘leader’. In China, this is as difficult as reaching the sky. It is all the more worthy of applause when Chinese companies, especially those renowned or authoritative enterprises and entrepreneurs, choose to back down. For example, Liu Chuanzhi sold Sunac Smart City, a business that had not been performing well for years, to Sunac – an act of admitting defeat, acknowledging Lenovo’s complete failure in its real estate business, both in terms of strategy and tactics. Those familiar with Lenovo’s internal corporate culture surely understand how difficult it was for Liu Chuanzhi to accept such a defeat. More importantly, the counterparty to the transaction is still Sun Hongbin. By stopping losses in a timely manner, Liu Chuanzhi gained the space and focus to develop other, more core businesses. After admitting defeat in the PC market, IBM focused all its efforts on systematic solutions, and it continues to generate substantial profits to this day. If these companies refuse to back down and persist in their course, all that awaits them is a fate of sacrifice; at best, they can only achieve a \"glorious death\". One of the most important tenets in business spirit and ethics is \"pragmatism\"; compared to a company’s survival, development, and profits, an entrepreneur’s temporary authority and reputation hold little significance. Fortunately, in modern China, there are more newcomers who are willing to admit defeat; a business environment free from the emphasis on face might enable Chinese enterprises and business culture to have a brighter future. Well, who do you think it is?