For Innovation to Succeed in Asia, Confucianism Must Die

In “Analects”, Confucius’ disciples eagerly lay out hierarchical structures their teacher used as the basis for an ideal social order. Subjects obey officials and kings, youths obey elders, women obey men, and children obey parents. Those who command obedience must rule by virtue, guiding those below to acquire the same in preparation for being obeyed one day. In the structured social order guided by virtue, there can be no reason and thus, no tolerance for insubordination. Not only can disobedience be a source of disharmony, it disrupts the essential transmission of virtue across generations, which in turn ensures maintenance and continuation of social order.

Unsurprisingly, Confucian ideas have transnational appeal among those in power. In the opaque court politics of the Medieval era, the concept of “virtue” is largely defined by those in power and is passively accepted by the masses. Short of outright starvation, there is little incentive for subjects to disobey kings and incur the corresponding costs, ranging from public disgrace to violent death. Confucianism became a code word for political authorities in East Asia to justify absolutist rule with humanist-sounding philosophical moralism. Indeed, many continue to consider Confucianism to be a shared cultural value among “Sinosphere” societies today.

Yet, fast forward two millennia from when Confucianism first made its mark, many dynamic alternatives to its ideals of rigid hierarchy have emerged. The spread of Enlightenment principles brought forth the idea of scientific reasoning as a way to determine the “truth.” All of a sudden, “virtues” are no longer evidenced by years of life experience implicitly encoded in seniority and superior social position. Instead, they are buttressed with outputs of empirical analyses. Those analyses favor not those higher in social ranks, but anyone who is capable and willing to think critically to rationally present solutions to existing issues.

"The decline of Sharp Corp. and HTC Corp., venerable manufacturing brand names only a few years ago, show how corporate inertia favored by senior leadership can quickly sink a firm, no matter how formidable it was in the past."

Perhaps the epitome of that “scientific method” today is the meteoric rise of the high-tech industry. Startups specifically focus on issues that trouble potential consumers on a daily basis. The social and economic issues inconvenience people to such a degree that there is often significant commercial value in resolving them. Startups analyze those issues, dissect their causes and persistence, and concretely propose resolutions using the most cutting-edge yet mass-consumable pieces of technology available. The fact that startup leaders come from every age group and social background in every country, only united by their pursuit of scientific solutions to real world problems, illustrates the power of Enlightenment principles.

Against the rise of enlightened tech startups is the continued presence of traditional companies operating on Confucian principles. Producing relatively similar products for decades, these firms rely on the experience of senior staff to ensure maintenance of the business status quo. Those who loyally work for decades are rewarded with complete obedience of subordinates. The supposed “virtues” of the senior staff is unquestioned by their juniors.

In the face of consumers’ changing tastes, these traditional firms speak only of “incremental” changes to their existing product lineups. New designs and functionalities may be introduced to core products to make them easier to use, but the value propositions of the products themselves remain unchanged. Senior leaders who monopolize decision-making in these firms are simply too risk-averse, and too attached to the products that are source of their exclusive knowledge and unquestioned power, to completely shift the company to new products that can solve new problems. As startups jump at opportunities to solve new issues consumers face, traditional firms find themselves hemmed in, sandwiched between lack of new markets to tackle and reduced demand for existing line of products.

Given Confucian thoughts’ prominence in the region, it is not surprising that there is an abundance of such traditional firms in East Asia. Decades-old manufacturing firms led by veteran company men perfecting their particular machines have struggled in an era where people demand more than just physical conveniences. Obliviousness of senior leaders to changes in market demand, and reluctance of obedient junior staff to offer alternative views, has doomed these traditional companies to losses in both revenues and prestige. Asian manufacturers, in particular, have seen their glory drift away even as their tech counterparts surge in market value. The decline of Sharp Corp. and HTC Corp., venerable manufacturing brand names only a few years ago, show how corporate inertia favored by senior leadership can quickly sink a firm, no matter how formidable it was in the past. Their decline is all the more painful to watch given the rapid growth of Asian “unicorns” in the tech industry, backed by dynamic tech giants like China’s Alibaba and Japan’s SoftBank Group Corp.

The key to reversing declining fortunes of traditional firms is to make them truly innovative in the “disruptive” sense, much in the same ways tech startups tackle new markets. And that effort must be led by the firms’ junior staff members, who, due to their youth, are more sensitive to the rapidly changing needs of consumers and the exploits of successful startups. The junior staff must be given more control over the future direction of traditional firms, in order to leverage their dwindling resources to steer the strategic direction toward new business opportunities.

Confucianism stands in the way. A decades-old culture of blindly obeying one’s seniors, enforced by moral principles of Confucian thought, prevent companies from simply handing over the helm to whoever seems most enlightened. Age, rather than business acumen or critical thinking, is the determinant of power in a Confucian system, an arrangement few dare to challenge for fear of instability and disorder. If Confucianism’s hold on absolutism of seniority is not broken, innovative junior staff will not be able to act on their ideas until they themselves become conservative-minded seniors.

The future of Asian, and global, economy now lies in the hands of truly disruptive innovators. Their ability to detect market needs, come up with creative solutions using the latest technologies, and quickly implement those solutions, will continue to create value for the economy in ways and at speeds that the world has never experienced before. Traditional Asian firms, bound by Confucian principles of corporate hierarchy, simply cannot compete with disruptive innovators unless they become more flexible and creative themselves. To do so, they must first shed the moral constraints Confucian principles put on them and replace conservative senior leaders with visionary junior ones.

Confucianism has served Asia well in the age of mass production that required absolute obedience of workers to the leadership. The unifying nature of Confucianism provided Asia with the political stability and economic hierarchy it needed to succeed in the manufacturing era. But today, the “virtues” of leadership are not bestowed upon those who are older, but those who are more analytical, scientific, and innovative. No matter what age and social background one may be, as long as one can come up with ideas that can solve problems in a commercial way, there is possibility of success. Such an egalitarian distribution of knowledge is Enlightenment-driven but fundamentally anti-Confucian.

In the world of innovation, ideas are always valued more than age or social position. Results from implementing ideas will determine social status, not number years of maintaining the status quo. The presence of Confucianism has made too many Asians reluctant to admit this fact and change their attitudes accordingly. For innovation to truly take hold, not just as something done by a few brave, rebellious individuals, but as a socially accepted and admired norm, Confucianism must first disappear from the Asian cultural repertoire.