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Prof. Gong Yuzhen: Growing Indispensability of Long-Termism

Mar 21-2022   



In the 42th MBA Forum at the NSD, Prof. Gong Yuzhen gave a keynote speech on the rising need for long-termism in restive times. He is Professor of Management with the NSD and Associate Dean of BiMBA Business School.

 

History has borne out a fundamental principle – only by adhering to long-termism can one win long-term victories, said Prof. Gong, using the case studies of Huawei and Alibaba to illuminate. At the turn of last century, Mr. Ren Zhengfei, founder of Huawei, vetoed a plan to develop Personal Headphone System (PHS, also known as Little Smart), which was all the rage then, believing that it was only a transitional and expedient technology. His bet on 3G, though, didn’t come to fruition until eight years later when Huawei obtained its first 3G license. The rest is history. Such long-termism also sustained Alibaba’s foray into cloud computing service even when hope seemed elusive. Jack Ma made a pep talk to the team at its darkest hour and promised to pour in RMB10 billion more. By contrast, Baidu, previously better positioned than Alibaba in cloud service, felt disillusioned with the field and lay off the whole team, which was then fully re-hired by Alibaba. Now Aliyun, the cloud arm of Alibaba, rules the roost in Asia Pacific and ranks No.3 globally.

 

The benefits of long-termism, though, hadn’t turned into rising numbers of believers. Still, Prof. Gong believed that this was the only tough yet right thing to do, especially in restive times. What separated short-termism and long-termism boiled down to resource allocation. The former put resources into current usage in a bid to passively adapt to changes in the environment; the latter deployed resources in a future-oriented manner with the aim of proactively shaping one’s own destiny.

 

Short-termism was rooted in the instinct for survival and tended to give rise to long-term damages for individuals and organizations alike. Long-termism, on the other hand, endowed an individual or an organization with a sense of purpose, a brand-new cognitive framework, consistence and continuity in actions, as well as the best chance to emerge out of involuted competitions, said Prof. Gong. As Warren Buffet famously quipped: no one wanted to copy his investment style, for no one was willing to get rich slowly.

 

To become a long-termer, Prof. Gong advised staying alert about the inevitable existence of short-termism and taking initiatives to activate and reinforce long-termism, which could be made into a value system and a set of thinking and action modes. Besides, long-termism meant putting trust in the future and bracing for uncertainties, which required individuals and organizations to believe in the power of long-term rationality, symbiosis, and concentration, among others. Society was bound to reward those enterprises that generated long-term values, concluded Prof. Gong.

 

Prof. Gong Yuzhen: Growing Indispensability of Long-Termism

Mar 21-2022   



In the 42th MBA Forum at the NSD, Prof. Gong Yuzhen gave a keynote speech on the rising need for long-termism in restive times. He is Professor of Management with the NSD and Associate Dean of BiMBA Business School.

 

History has borne out a fundamental principle – only by adhering to long-termism can one win long-term victories, said Prof. Gong, using the case studies of Huawei and Alibaba to illuminate. At the turn of last century, Mr. Ren Zhengfei, founder of Huawei, vetoed a plan to develop Personal Headphone System (PHS, also known as Little Smart), which was all the rage then, believing that it was only a transitional and expedient technology. His bet on 3G, though, didn’t come to fruition until eight years later when Huawei obtained its first 3G license. The rest is history. Such long-termism also sustained Alibaba’s foray into cloud computing service even when hope seemed elusive. Jack Ma made a pep talk to the team at its darkest hour and promised to pour in RMB10 billion more. By contrast, Baidu, previously better positioned than Alibaba in cloud service, felt disillusioned with the field and lay off the whole team, which was then fully re-hired by Alibaba. Now Aliyun, the cloud arm of Alibaba, rules the roost in Asia Pacific and ranks No.3 globally.

 

The benefits of long-termism, though, hadn’t turned into rising numbers of believers. Still, Prof. Gong believed that this was the only tough yet right thing to do, especially in restive times. What separated short-termism and long-termism boiled down to resource allocation. The former put resources into current usage in a bid to passively adapt to changes in the environment; the latter deployed resources in a future-oriented manner with the aim of proactively shaping one’s own destiny.

 

Short-termism was rooted in the instinct for survival and tended to give rise to long-term damages for individuals and organizations alike. Long-termism, on the other hand, endowed an individual or an organization with a sense of purpose, a brand-new cognitive framework, consistence and continuity in actions, as well as the best chance to emerge out of involuted competitions, said Prof. Gong. As Warren Buffet famously quipped: no one wanted to copy his investment style, for no one was willing to get rich slowly.

 

To become a long-termer, Prof. Gong advised staying alert about the inevitable existence of short-termism and taking initiatives to activate and reinforce long-termism, which could be made into a value system and a set of thinking and action modes. Besides, long-termism meant putting trust in the future and bracing for uncertainties, which required individuals and organizations to believe in the power of long-term rationality, symbiosis, and concentration, among others. Society was bound to reward those enterprises that generated long-term values, concluded Prof. Gong.