Long-Term vs Short-Term Orientation

That which is one is one. That which is not one is also one. - Chuang Tzu.

In the mid-eighties, a detailed survey called the Chinese Value Survey (CVS) was developed. It was designed by Michael Bond, a Canadian who lived and worked in the Far East since 1971. He designed the questionnaire with a deliberate non-Western bias; however, it does have a Chinese culture bias. He did this by asking a number of Chinese social scientists to create a list of at least 10 basic values for Chinese people. It was given to a number of people in 22 countries plus China. To a lot of Westerners, some of the questions were quite strange, e.g., filial piety — honoring ancestors and obedience to, respect for, and financial support of parents.

While it was used to correlate three dimensions in other western style cultural surveys, it had a fourth dimension unrelated to anything found with Western surveys — “Confucian dynamism” (referring to the teachings of Confucius). In practical terms, this refers to long-term vs short-term orientation of life and is composed of the following values. On the long-term orientation axis we have:

On the opposite short-term orientation axis:

All the values are taken straight from the teachings of Confucius, however, the values on the first axis are orientated towards the future and are more dynamic, while the values on the second axis are orientated towards the past and present, thus are more static. Note that one orientation is not good and the other way is not bad — they are simply orientations towards life.

Listed below are the scores of the 23 countries samples for the LONG-TERM orientation:

The five Eastern economic dragons (Hong Kong, Taiwan, Japan, South Korea, and Singapore) are in the top 10. Also, the index across all 23 countries strongly correlated with the economic growth data published by the World Bank for the period between 1965 and 1987 (which covers the time the survey was given). While China is on the top of the chart, but is not the top economic nation, is because it started close to the bottom economically, but its growth rate of 5 percent was leading at the time.

While there are correlations to be made, there is no real proof of a causal link. But it is interesting that at the time, no other surveys had any indications of why the the five economic dragons were doing so good. In fact, they snuck up and surprised most economists.

The short-term orientation is also identified with Truth, while the long-term orientation is identified with Virtue. Confucius dealt with Virtue but left the question of Truth open. Our interpretation of the Truth is how we in the West view religion, science, and management.

Thus, when information is manipulated or held to obtain a certain result, then one is simply going after the short-term orientation. There may be truth to the results, but the virtue of it has been removed. However, when we take the long-term view, we can practice Virtue without seeking the Truth, we can mix religion with Confucian, we can mix Eastern management styles with Western management styles.

A short-term view of results occurs when we know what result we want, thus we are willing to play with the truth to get it. A long-term view of results mean that we will get it when we get it — it is more important to find the greatness in our results than to find the result that we want.

And for quite some time that has been China's philosophy — taking the long-term outlook. However, to go beyond manufacturing and on to innovation, information, and knowledge is something that their oriental philosophy is designed for, yet their socialistic view abhors. Socialism rules by controlling information. Innovation rules by allowing the greatness of it to come through.

Historically, China has had NO interest in the West, and that's even at the highest levels of politics, which is one reason they've been so difficult to interact with. That of course is changing now, and it's changing fast. Like Japan, they will take what works best from everywhere, discard what doesn't, and they will adapt what they take to their own culture and resources. They are; however, skipping all the intermediary steps (and the time) that Japan took to evolve from a manufacturer of junk products to dominating markets.

China has grown economically because capital was pumped into their economy from outside sources to take advantage of their cheap labor. India, on the other hand has created several companies that have the potential to become disruptive innovations, e.g. Dr. Reddy's Laboratories (pharmaceuticals ), Wipro (IT Services), and Infosys (software, IT). Thus, India has a greater long-term potential than China does (note that India is number seven on the above list).

And again this could change, but we always talk about how hard is is too change the culture within an organization. With China, you have to change the world's largest population. Now the majority of the population might want to change, but when they are led by a small group that dominates through total control, it could be extremely hard to fathom having them let loose the reigns so that innovation can take place. This might be why they are at the top of the long-term orientation list, but not the economic list — they have the culture for it, but their leaders must control to remain in power.

Reference

Hofstede, Geert (1997). Culture and Organizations: Software of the Mind. New York: McGraw-Hill (ch7).

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