Situation: A company recently set up an operation in Shanghai. An immediate shock has been that that the Chinese engineers have not been able to solve problems creatively. To date their solutions are limited to following an outline provided by the home office. How does the company address this? How do you get a Shanghai office up to speed?
Advice from the CEOs:
Current Chinese culture is to do what you’re told, and not to vary from the direction given by those to whom you report. However, these are smart people. Given time and training they will get through this. Can you be patient enough to allow this to occur?
The most important role in your Shanghai location is a trusted, competent Chinese General Manager. This individual can get you where you want to be the fastest. It is also the hardest position to fill in China.
One option is to investigate connections through the SCEA – Silicon Valley Chinese Engineers Association. Many SCEA members are Chinese who have been educated in the US but want to return to China. You may find good candidates here.
The best candidates have bi-cultural exposure – they understand Chinese culture, but also understand US standards, expectations and operations.
Be sure to check US references of any candidates who are currently in the US.
Early operations and adaptations are the most difficult. Talk to people in Shanghai who have solved this problem.
Develop a separate project selection / development methodology for projects you want to transfer to China. This will change as the Chinese employees begin to approach US standards.
As you hire new Chinese employees, look for individuals who play and write music. They are naturally more creative. Microsoft has used this approach successfully in China.
Situation: A company has a key relationship with a major corporation. They recently completed work in Phase I of a multi-phase project which was fraught with difficulties. Now they are evaluating whether and how to proceed with Phase II. Do you continue a difficult partnership?
Advice from the CEOs:
What made Phase I difficult?
Initial work was done to original specs and on time. The partner then asked for additional work and a change to the original specs, but would not agree to pay for these changes. As a result, the company lost money on Phase I.
What alternatives exist?
In brief, you must fundamentally change the terms of engagement. You can convert everything to time and materials, so that when the partner makes changes or asks you to make changes, they pay as they go.
A second alternative is to reconstruct the project as a waterfall project with a fixed price up front. You agree to X iterations, at Y cost per iteration. Each iteration has a deadline and the work completed as of each deadline constitutes the final work on that iteration. You charge for additional iterations if the partner wants additional work after the final negotiated iteration.
A third alternative is to set a price that is 2x your estimated price, recognizing that there may be a need to change specifications during development. You will provide documentation of your time and effort. If at the agreed end of the project you have not used all of the funds budgeted, you refund the difference to the partner.
Adjust how you communicate with the partner as you renegotiate. Do not assume that silence constitutes agreement. Provide written documentation of your understanding at the close of each negotiation and invite them to correct any misunderstandings. Require that both sides sign this documentation to confirm agreement. Do not proceed until there is clear mutual understanding on all key points.
Purchase and use software to track any changes to requirements during the project. This will enable you to document both the changes requested and their waterfall effect on other portions of the project.