Case studies
Case: Bright China Holdings Ltd.
Bright China Holdings is a new model of the next generation socially responsible company. Bright China founder Minglo Shao is a man of world-class integrity who was inspired by personal conversations with Peter Drucker and Warren Buffet. In many ways, Bright China Holdings is a leader – both globally and inside China. And management from all corners of the world should benefit from becoming aware of this model.
Globally, Bright China leads as an enterprise that houses a for-profit business, a foundation, and a teaching academy all under one roof. At 58, Chairman Shao has a strong vision of how he wants China and the lives of its people to be changed. It is built on creating opportunity and respect for everyone. Chairman Shao believes that without socially responsible companies dedicated to helping China, the country cannot create a sustainable society. He does not believe that a separate segment of foundations and charities is required or viable to perform the social responsibility roles. Rather, he and his organization are working hard to shift the leadership of social progress in China to the business community.
Chairman Shao explains it, “We are striving for a new paradigm – establishing a social enterprise inside China. In that paradigm the for-profit businesses provide funding. But the need for services in China — education, social services, health care, and aid to our poorest people — is so big and Bright China is only one company. I want to find like-minded business leaders and work together with their companies to begin to meet this need. I really believe this will be a big movement in the next 5 to 10 years.”
The Bright China model of linking profit, not-for-profit, and education in a broader enterprise would be unusual in any nation. That this model was developed in China is compelling evidence of the power of management determination against all odds. The notion of corporate social responsibility (CSR) and foundations are still in their infancy in China. It is worth noting that foundations are still new enough in China, that, in 2007, over 80 percent of donations to all foundations in China come from outside the country. Further, the for-profit enterprises are not totally independent of the government. The Bright China model also builds working relationships with a plethora of government agencies.
In 1984, Chairman Shao first began investing his personal earnings from his ironing job in a shirt factory and previous investments in some small real estate in Hong Kong in a factory in Southern China. The Bright China name was adopted in 1993 as his investments were expanding. The non-profit portions of his enterprise began in 2001, when Chairman Shao identified how he was going to help China become sustainable by asking his management team, "What can Bright China do to help the isolated people in the rural areas of China?”
At that time, foundations, or not-for-profits, were not recognized legal structures in China. So, Chairman Shao set them up in the United States and Hong Kong. When the Chinese government created charters for foundations, in 2004, Bright China also set up the foundation on the Mainland.
The collective mission of Bright China Holdings is: “To honor truth in all we do; to help people develop; to pursue excellence; and to grow profitably. The combined organization is a platform to help people develop and to produce services and products for people.”
The Bright China Holdings model is designed around the elements of Peter Drucker’s “triangle”— organizations, individuals, and a functioning society — with each element represented by one of the three mutually supportive Bright China entities. The for-profit business supports Bright China’s two non-profit organizations and thereby contributes to a functioning society and a unique organization. The Bright China Foundation supports and helps educate deprived and powerless individuals and thus contributes to individuals and the functioning society. The Bright China Management Institute —known as The Drucker Academy — helps organizations, principally by training powerful individuals, mostly executives, to manage for results. The three entities fit together well because of their complementary missions and shared goal of making China a significantly better place for individuals to have opportunity and succeed.
Bright China For-Profit Business
The for-profit entity began in 1993, bringing together Chairman Shao’s development projects in Dongguan, Hong Kong, and Beijing. In 1996, Chairman Shao was in the Chicago airport and observed the cleaning crew wearing uniforms, proud of what they were doing. They were working for ServiceMaster. He contrasted this image with that of the cleaning people in China — kneeling down, working with their hands on the floor, with dirty water, and without dignity. Why couldn’t this model be brought to China, so Chinese workers could function like their American counterparts, taking pride in their work, being well trained, etc.? Chairman Shao believed this was an opportunity.
The Drucker Academy Or The Bright China Management Institute
Chairman Shao established The Drucker Academy in 2001 to train powerful leaders and strong managers. By teaching Drucker’s principles, philosophy, and logic to managers, Chairman Shao felt he could help create a healthier society in China.
Chairman Shao’s vision began in the late 1990s as he had grown to believe that China’s management needed training, in part because of his experience with Bright China Service. Many of the leaders in business had worked their way up, and their only concept of management was that which they had seen or had been painted 20 years earlier by the communist government. Chairman Shao said:
“Some people did not get a chance to receive good education, but they were pushed into management positions or became entrepreneurs. These people are now running big businesses, offering employment opportunities, and controlling resources; many of them desire to improve their management skills and performance, and hope to drive the growth of our economy and community through their own efforts.”
Chairman Shao did not believe traditional training or schools were geared towards their needs. In particular, he explained:
“I am thinking of those people who have been working their way up from the bottom. For example, some people in our company who have little education show an extremely strong commitment to service and sense of responsibility. They have been promoted to supervisors and then to managers, and now each of them may manage several hundred or even several thousand employees. Whether because of age or cultural background, these people no longer have the opportunity of studying for an MBA, but they generally are very high in potential, and I hoped to provide them a chance for further education.”
To help address this need, in 1999, Chairman Shao spent 11 months visiting the top business schools around the world to see if there was any opportunity to partner with one of them in China. Chairman Shao’s ideal partner was a school that could help the Chinese entrepreneur do a better job of managing and thereby have a positive effect on the culture and society. He did not find such a school.
At the end of 1999, Chairman Shao went to visit the then 90-year-old, Peter Drucker at his house in California. They had a very productive conversation because Peter Drucker was a great visionary who could help Chairman Shao visualize the power and potential of his concept. Peter Drucker commented, “The rapid development of competent managers and entrepreneurs, capable of competing with the world’s best, is surely China’s greatest need, and the key to the country’s social and economic success is making available to China’s executives and entrepreneurs the world’s best management knowledge and management tools.” Peter Drucker also agreed to actively advise Chairman Shao as the Bright China Management Institute was being put in place.
Today, the institute is known as The Drucker Academy. It has 15,000 graduates and operates programs in 10 provinces and Hong Kong with 22 full-time staff and 10 part-time faculty. They train about 5,000 students per year. The Drucker Academy focuses on management and shares the Peter Drucker legacy with China’s knowledge workers. The curriculum incorporates the best management tools and includes only Drucker-based material. There are no finance courses.
Stephen Lee Chairman of The Peter Drucker Academy, explained with great pride, “Executives from across China, including government officers, participate in the programs and generally range in age from 35 to 55. A number of the programs are taught at government agencies or private schools owned by the students’ companies. There is tremendous demand in China for the academy’s offerings. Every weekend is booked.”
Chairman Shao believes that if the management of China can be trained with Peter Drucker’s tools, they will be much better leaders and will have a compass for making decisions that will support a sustainable society. The program is training Chinese executives to be effective managers so that their organizations can grow rapidly, provide employment, and assume social responsibilities.
Challenges
The demand to attend Drucker Academy programs far outstrips the school’s capacity, and developing additional excellent teachers is the school’s greatest challenge. According to chairman Steven Lee: “We are recruiting and training teachers every day, and we have to send our teachers to other provinces as well – we don’t have enough teachers to teach Drucker programs.”
The academy wants its teachers not only to have good knowledge of Drucker but also to become real followers. “We have teachers who study most of Drucker’s books and can memorize most of Drucker’s statements. We cannot say they are real followers of Drucker. They do not behave 100 percent of what Drucker taught.”
Bright China Foundation
The Bright China Foundation’s mission is to equip people to develop with dignity and to inspire them to help others. The foundation has six full-time staff members and more than 100 volunteer teachers. Its programs to date have focused on the rural population.
Established in 2002, the foundation is targeting unemployed people living in bad conditions in the poor sections of Central and Western China. Chairman Shao asked his team, "What can Bright China do to help them?”
The team agreed on three initiatives – a scholarship program for high school students, an entrepreneurship program in conjunction with the National Foundation for Teaching Entrepreneurship, and a total immersion program of English language instruction.
Scholarship Program
Bright China scholarships are awarded to high school students from families with an annual income of less than U.S. $80. The foundation is currently helping 19,000 students. According to one staffer: “This year, 7,700 families applied for our scholarships. The circumstances varied but were dire. In some cases, they have to walk barefoot for 2 hours to reach the school. There are many families in the Western part of China where the household has one pair of pants for whoever is going out. Others use 40-watt night light bulbs for one hour a day for the whole house. The kids must finish homework in that hour or wake up at 5 in the morning the next day.”
Entrepreneurship Program
In 2003, Bright China found a partner in the National Foundation for Teaching Entrepreneurship (see NFT.com). Henry To, president of the Bright China Foundation, was certified, moved back to China from the United States, and translated the program with localized Chinese cases. Most of the students in the entrepreneurship program are from poor families, and many are in some form of trouble. They are generally high-school age, but not exclusively.
Reflecting Peter Drucker’s emphasis on developing people by concentrating on their strengths rather than weaknesses, the program offers students a very different learning experience. Traditional Chinese education is always negative. Teachers say, “This is wrong. You are not perfect.” In the Bright China program, the teachers are not allowed to say negative comments. As President To described the effort:
“We train the teachers to make the students feel comfortable and encourage students to shine. Each student has to complete a business plan and present it to the class. The first sentence of the business plan —‘My name is ABC, I am the managing director of this company’ — has a huge impact on self-esteem. Imagine saying this sentence in front of everyone. Now imagine saying it and being the child of parents in jail, or just released from jail yourself.
Every time they speak this sentence they start crying. They were never heard by anyone about their dreams. Others are listening and giving good suggestions. It is often the first time they feel others care.
This program transforms the mindset of the people, the personal image and values of the students. Our teachers have to show respect to the students. To graduate, the students have to answer one question; If one day you become successful, what kind of contribution can you make to the society? If they don’t answer this – they do not graduate.”
The entrepreneurship program has taken off. In 2007, beyond operating in six provinces, the program is working in conjunction with:
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A government agency, to train single moms,
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The handicapped federation,
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The prison department, which invited President To to share the program with them and train their officers,
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The public education system to train 25,000 vocational teachers over the next 3 to 5 years so they can train 40 million high school students.
Total Immersion for Teachers of English
Chairman Shao believes that, to succeed, the Chinese need to know English. The foundation’s total immersion program is designed to teach English to teachers of the English language, many of whom do not know the English alphabet. British teachers drive to schools in the West, and some teachers are sent to Beijing for 3 to 4 weeks. Every day, everything they see and listen to is in English. As these teachers are trained, they in turn can touch thousands of Chinese students of English.
Challenges
The foundation’s greatest challenge is how to support and educate the government so as to help the rules, regulations, and operations of the government mature. This will not only make for a better Chinese society but will make it easier for the foundation’s programs to operate. On occasion, officers are suspicious of a program that originated in the U.S. and, as a consequence, may cancel a scheduled class.
The other challenge the team is wrestling with is how best to take this program further. The foundation is considering setting up a micro-loan program to help the entrepreneurs get started with their business ideas.
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All three of the Bright China Holdings track results using some for-profit metrics. The two non-profit arms also track number of students, costs, grades achieved, etc. However, against Chairman Shao’s vision of having a positive impact on China, extends far beyond these more traditional measures. “We want to see lives being changed through our intervention and establishment of our businesses. We want to see the lives touched, we want to see them get a job. We want to see the family’s lives improved. We want to see the family members live and work together."
As Peter Drucker wrote to Chairman Shao in one of their last correspondences, “I hope that every article from me is not only the ‘engine of thinking’ for Chinese readers but also becomes the ‘engine of actions.’ Because for management, it is not philosophy or theory, management is actions and results.”
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