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Interview with Gaven Chen (Full-Time MBA Class of 2011): Challenges of Business Succession

Dec 27-2013   



9716212935_c715688428_z

In Chen Ming Guo’s Taipei office sits an old calculator, one that he has used for over 20 years.

Mr. Chen’s textiles business has grown from Taiwan to mainland China and from China to the world.   Mr. Chen’s management has not been driven by new-fangled tools such as KPIs or ERPs but rather a traditional hands-on approach, armed with nothing but his trusty calculator, a pen and of course his know-how. Since starting work in a factory at the tender age of 12 his old-fashioned management ‘toolkit’ has never failed him.

According to Mr. Chen’s son, Gaven Chen, this amounts to a company’s conservative nature and falling behind the times. It is a classic case of management by authority – in the early stages of a company’s growth, costs are kept low and efficiency high due to the strength of the founder’s operational strength and clear targets. After 40 years, Gaven believes this management style is starting to show its age. “Internally, workers all follow the boss, what he says is final. In the long term, workers have no policy making power and therefore do think about their work.”  In an interview with Sino Foreign Management  magazine, Gaven reflected on his experience upon entering his father’s company in 2007: “When a company grows to encompass multiple industries, the owner will never have enough time (to manage) – along with an aging founder, the business will start to take a downward turn.”

It’s time for a change. In September 2007 upon graduating from the University of British Columbia in Canada, Gaven entered his father’s company. Within the first few months, Gaven watched his father’s management of this international multi-industry company. Seeing his father’s energies stretched, he tried to persuade him to relinquish some control to staff and improve the business via fundamental management techniques like KPI and ERP. His efforts were in vain – Mr. Chen rejected his plans for a new Purchasing management system, let alone relinquishing control. Middle management were not about to take on this risk and they knew that Mr. Chen would not take to this new form of management. Seeing his initial ideas were not gaining traction, Gaven decided to give up on the idea.

Understanding that he couldn’t convince his father and staff to make such a radicial change, Gaven asked to be transferred to the company’s Guangdong company, Guangdong United Textiles.

Away from the centre of power in Taipei, Gaven had more freedom to enact his own managerial style. Under his management, the Jiangmen (Guangdong) factory made rapid changes – this showed Mr. Chen a measure of Gaven’s ability. A few months later, Gaven asked to be enrolled in the NSD’s BiMBA programme – a request his father readily accepted.

BiMBA was a turning point for Gaven – after two years at Peking University, Gaven was able to draw upon his learning from the course and various management theories. Rather than call for a radical change, he now wanted to evolve the business whilst keeping the best elements of his father’s character and management style.

In the last 60-odd years, Mr. Chen has not only reached the pinnacle of his profession but has also created a working culture that can be passed to the next generation. In his few years at the Jiangmen plant, Gaven has gained a much deeper understanding of his father’s company culture and business model. This has strengthened both his working and personal relationship with his father.

Giving a speech to BiMBA students in June 2012, Mr Chen said that his first venture was with his brothers; his second with his wife and he hoped his third would be with his son. Taking Guangdong United Textiles from a dyeing company to a trading and services company was in fact his third venture with his son.

Rising labour costs and costs of environmental protection have eaten into profits at the company. However, whilst competitors in the field have all but disappeared due to these costs, United Textiles has remained.

Reflecting on his past 5 years’ experience, Gaven noted that for business successors, one must gain recognition and acknowledgement (from staff and colleagues) before enacting any changes. Changes should then be made little by little rather than through any big changes. As Mr. Chen gets older and looks toward retirement, Gaven would like to take on more responsibility to take off pressure from his father.

Today, China’s business succession is reaching a peak. Gaven’s story is one of many business handovers in today’s China. Many Chinese privately owned enterprises flourished with the economic opening of China, but a number of these enterprises are not standardised in their practices, which could hurt their further development. Challenges facing business successors are the same as those facing Gaven: how to innovate the business model, standardise management systems, how to move up the value chain and how to develop an efficient working culture.

Gaven Chen’s case presents a common moral: for an enterprise to keep growing one must continually innovate and develop; business successors must make this happen and gain acceptance from those in management of daily operations.

Interview with Gaven Chen (Full-Time MBA Class of 2011): Challenges of Business Succession

Dec 27-2013   



9716212935_c715688428_z

In Chen Ming Guo’s Taipei office sits an old calculator, one that he has used for over 20 years.

Mr. Chen’s textiles business has grown from Taiwan to mainland China and from China to the world.   Mr. Chen’s management has not been driven by new-fangled tools such as KPIs or ERPs but rather a traditional hands-on approach, armed with nothing but his trusty calculator, a pen and of course his know-how. Since starting work in a factory at the tender age of 12 his old-fashioned management ‘toolkit’ has never failed him.

According to Mr. Chen’s son, Gaven Chen, this amounts to a company’s conservative nature and falling behind the times. It is a classic case of management by authority – in the early stages of a company’s growth, costs are kept low and efficiency high due to the strength of the founder’s operational strength and clear targets. After 40 years, Gaven believes this management style is starting to show its age. “Internally, workers all follow the boss, what he says is final. In the long term, workers have no policy making power and therefore do think about their work.”  In an interview with Sino Foreign Management  magazine, Gaven reflected on his experience upon entering his father’s company in 2007: “When a company grows to encompass multiple industries, the owner will never have enough time (to manage) – along with an aging founder, the business will start to take a downward turn.”

It’s time for a change. In September 2007 upon graduating from the University of British Columbia in Canada, Gaven entered his father’s company. Within the first few months, Gaven watched his father’s management of this international multi-industry company. Seeing his father’s energies stretched, he tried to persuade him to relinquish some control to staff and improve the business via fundamental management techniques like KPI and ERP. His efforts were in vain – Mr. Chen rejected his plans for a new Purchasing management system, let alone relinquishing control. Middle management were not about to take on this risk and they knew that Mr. Chen would not take to this new form of management. Seeing his initial ideas were not gaining traction, Gaven decided to give up on the idea.

Understanding that he couldn’t convince his father and staff to make such a radicial change, Gaven asked to be transferred to the company’s Guangdong company, Guangdong United Textiles.

Away from the centre of power in Taipei, Gaven had more freedom to enact his own managerial style. Under his management, the Jiangmen (Guangdong) factory made rapid changes – this showed Mr. Chen a measure of Gaven’s ability. A few months later, Gaven asked to be enrolled in the NSD’s BiMBA programme – a request his father readily accepted.

BiMBA was a turning point for Gaven – after two years at Peking University, Gaven was able to draw upon his learning from the course and various management theories. Rather than call for a radical change, he now wanted to evolve the business whilst keeping the best elements of his father’s character and management style.

In the last 60-odd years, Mr. Chen has not only reached the pinnacle of his profession but has also created a working culture that can be passed to the next generation. In his few years at the Jiangmen plant, Gaven has gained a much deeper understanding of his father’s company culture and business model. This has strengthened both his working and personal relationship with his father.

Giving a speech to BiMBA students in June 2012, Mr Chen said that his first venture was with his brothers; his second with his wife and he hoped his third would be with his son. Taking Guangdong United Textiles from a dyeing company to a trading and services company was in fact his third venture with his son.

Rising labour costs and costs of environmental protection have eaten into profits at the company. However, whilst competitors in the field have all but disappeared due to these costs, United Textiles has remained.

Reflecting on his past 5 years’ experience, Gaven noted that for business successors, one must gain recognition and acknowledgement (from staff and colleagues) before enacting any changes. Changes should then be made little by little rather than through any big changes. As Mr. Chen gets older and looks toward retirement, Gaven would like to take on more responsibility to take off pressure from his father.

Today, China’s business succession is reaching a peak. Gaven’s story is one of many business handovers in today’s China. Many Chinese privately owned enterprises flourished with the economic opening of China, but a number of these enterprises are not standardised in their practices, which could hurt their further development. Challenges facing business successors are the same as those facing Gaven: how to innovate the business model, standardise management systems, how to move up the value chain and how to develop an efficient working culture.

Gaven Chen’s case presents a common moral: for an enterprise to keep growing one must continually innovate and develop; business successors must make this happen and gain acceptance from those in management of daily operations.