A look at the pain of Khwarezm in start-up companies from Zhou Houjian's 1,000-word email

In the tide of entrepreneurship, there are so many start-up companies. Who can make a breakthrough and build a lasting business during the long-term operation of the company?

A sentence from management giant Drucker fundamentally solved this problem. He said: The first management principle of corporate organization is that management is about people.

Drucker has a bird's-eye view. It is true that people make up an enterprise, and the rise and fall of an enterprise also depends on people. Once there is a problem with people, especially integrity, an employee may lie about military intelligence for the sake of performance, which may become the Achilles heel of the enterprise in the future - a fatal injury.

The historian Huang Renyu mentioned the concept of "digital management" at the beginning of his thought-provoking masterpiece "The 15th Year of Wanli". That is to say, whether it is a country or a company, the most important thing in the management of people is to get a number, an accurate result that can provide a basis for decision-making.

At present, among the countless startups in China, many are indifferent to this, or even deliberately trample on it. For example, the financing amount of startups is handled vaguely, with some saying that they raised millions when they raised 2 million, and some simply multiply the number by five or ten, and dare to claim that they raised 10 million when they raised 10 million.

This is the current reality. Whoever follows the rules will lose at the starting line, or at least suffer a loss in terms of the level of attention the company receives.

But for a company, a lie may sow the seeds of disaster. When a startup company gets a taste of the sweetness of a lie, it will not turn back, but will become addicted like a drug, and will advertise that the product has more than 10,000 users on the first day of launch even if it only has 500 users.

Wang Xiaobo told a story in his "The Problem of the Khwarezmian Messenger". The ancient Central Asian country of Khwarezm had a strange custom. Any messenger who brought good news to the king would be promoted, and those who brought bad news to the king would be sent to feed tigers... The king of Khwarezm had a kind of almost naive character. He thought that rewarding those who brought good news would encourage the arrival of good news, and executing those who brought bad news would eradicate the bad news.

The messenger did nothing wrong, he just completed the procedure of delivering the letter. The absurdity of the story lies in the king who made this rule. Wang Xiaobo said, "The messenger of Khwarezm will become cunning sooner or later."

A lie can only be covered up by another lie, and the result is predictable. In fact, it is not uncommon for startups in China to go bankrupt because of data fraud. Just open the search engine and you will find a lot of them.

When will Chinese entrepreneurs stop this "Khwarezmian custom"? Hisense President Zhou Houjian gave the answer - zero tolerance and immediate execution.

Yesterday, a piece of news told us that Hisense’s internal self-media "Youxin" disclosed to all employees a thousand-word long email from Chairman Zhou Houjian to an engineer.

At an important product planning meeting, an engineer's subordinate Xiao Zhang reported the cost of a key component of a laser TV without verification. He first said a number with a decimal point, which looked real. Later, he changed it to an integer without a decimal point and insisted on reporting this integer.

Faced with the detailed list of errors, the engineer did not take the initiative to correct them. Instead, he tried to verify his subordinates' statements in an attempt to help cover up the errors. Zhou Houqian believes that this matter has touched the bottom line of technical personnel.

In the email, Zhou Houjian used harsh words: "Companies often have the bad habit of bragging. Don't I know that bragging can bring benefits to the company? But it damages the corporate culture and the cost will be long-term. If it is allowed to spread rampantly, Hisense will have no future. If it is a blatant lie, I will resolutely stop your work."

At this point, the result is no longer important. This can be seen from Zhou Houjian's handling of a similar incident at Hisense thirty years ago. "Hisense once had an old engineer named Sun, who was valued by the company and respected by employees for his excellent skills. However, because he lied about an important incident, he no longer had a place in the technical team and was subsequently transferred out of Hisense."

Pictured is Zhou Houjian's famous quote: Honesty is not only morally correct but also economically efficient

Honesty is the bottom line of human nature. To maintain this bottom line, we must rely on severe punishments, which is also a difficult decision for many startups. After all, starting from the boss (king), the system he designed has created the absurd and ridiculous "Khwarezmian custom" for messengers, where they can hear good news every day.

As Dr. Li Jiangtao, a professor of management at Tsinghua University, said, "Chinese people pursue results, so many people falsify data to achieve results. Because they know that if they falsify data well, the result will be achieved and they will be rewarded. Compared with this Chinese-style result management, Western management has made some progress. Because the West has moved from result management to process management. Moving from results to process is an improvement in management. Although the cost is high, it can prevent falsification and changing results."

Only the correct process will lead to the correct result.

No fraud or false reporting in entrepreneurship

Thirty years ago, Zhou Houjian brought Hisense from a small factory to its current scale of annual sales of hundreds of billions; thirty years later, he still chooses to elevate the issue of integrity to the key to the survival of the company. Is this an exaggeration?

"If a man is not trustworthy, he is not worthy of trust." Even if dishonesty is conducive to the completion of current tasks and the improvement of operating indicators, the result will inevitably push the enterprise into decline. Dishonesty is actually accumulating corporate risks, and such profits are actually sowing the seeds of disaster for the future of the enterprise.

Japan previously conducted a survey among 4,000 time-honored enterprises nationwide, asking them to use one Chinese character to summarize the "secret to longevity." Unanimously, most enterprises chose the word "faith," followed by "sincerity."

Facts also tell us that any company that lacks integrity, even a giant like Toshiba, can be doomed to failure by falsifying a single financial figure.

If we break the word "integrity" into two parts, "sincerity" means "respect heaven and love people", and "trust" means "means of doing things". Integrity, internally, is the action taken to realize ideals, and externally, it is a commitment to quality and service.

Relevant data show that the average lifespan of Chinese companies is only 7-8 years, and the average lifespan of small companies is only 2.9 years. Nearly 1 million companies go bankrupt every year. Obviously, this is inseparable from the fact that many young companies are accustomed to boasting and making big promises.

When the boss starts to like "Khwarezmian customs", don't expect employees to become the iron-willed Wei Zheng.

In recent years, the crazy rush of Chinese people to buy rice cookers and toilet lids abroad has greatly irritated us. But when we accuse some consumers of worshipping foreign things, should our industry also consider whether your products are honest to our consumers?

Zhou Houjian, who strictly controls integrity internally, once said, "Companies that are not responsible for their products are deceiving consumers. Hisense has clearly stated that quality is a person's character. If you cannot be responsible for quality sincerely, you have no integrity and you will not be trusted. Therefore, trust is the best communication tool."

The road to entrepreneurship is long. Who will accompany you until your business is everlasting? Learning from the older generation of entrepreneurs’ spirit of not falsifying facts and not creating Khwarezmian customs may be a shortcut that every young entrepreneur should think seriously about and act immediately.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.