Taiji Logic: Chinese Wisdom for Project Governance [1st ed.] 9789811552380, 9789811552397

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Ronggui Ding

Taiji Logic Chinese Wisdom for Project Governance

Taiji Logic

Ronggui Ding

Taiji Logic Chinese Wisdom for Project Governance

123

Ronggui Ding School of Management Shandong University Jinan, Shandong, China Translated by Prof. Jian Zuo School of Architecture and Built Environment The University of Adelaide Adelaide, SA, Australia

Zhimin Ding Computer Science Department The University of Texas at Austin Austin, TX, USA

ISBN 978-981-15-5238-0 ISBN 978-981-15-5239-7 https://doi.org/10.1007/978-981-15-5239-7

(eBook)

Jointly published with China Electric Power Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: China Electric Power Press. © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are reserved by the Publishers, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

We are in the era of VUCA. Significant challenges are presented to management activities due to Volatility, Uncertainty, Complexity, and Ambiguity (VUCA). New ideas, theories, methods, and cases are emerging endlessly. Instead of assisting us to manage enterprises and projects, these tools make us more confused and restless. The new world cannot be adopted by conventional management theories and methods such as administrative power, authority, teamwork, and reliable planning. We are constantly challenged by technological innovations such as Artificial Intelligence, Internet of Things, Digital resources, and Blockchain. As a result, we feel insecure and that the traditional skillsets are obsolete. In theory, management should serve as the driver of technological innovation and social development. However, the current management methodology not only is behind technological development but also will likely become the barriers to technological innovation and social development. It is useless to change for the sake of change. We may end up lost in various new technologies and big data. There is a traditional Chinese saying: “You will receive nothing if you do not keep practicing”. If the only focus is placed on management theories and methods, the fundamental philosophy will not be discovered and the epistemology of management personnel will not be formed. If such epistemology cannot be realized by clear logic, management theories and methods will very likely become dogmatic and specious. Consequently, effective management strategies could not be arrived on a timely basis according to aims and conditions. Change is the driver of VUCA. The only thing that does not change is change itself. However, the logic and methodology of us viewing the world has to be stable. As stated in the Diamond Sutra, “if all forms are seen as unreal, the Tathagata will be perceived.” It is imperative to focus on the essence of human beings rather than the surface of VUCA. As a result, we would have a frame of reference to external changes. Changing for the sake of changing will easily lead to confusion. Therefore, a clear and stable logic will help us to gain a better vision in such rapidly changing world and provide both physical and mental freedom as it helps us to understand the rationale behind success or failure to prevent us going to the extreme, and improve our management efficiency by making most of the v

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internal and external resources. In other words, it is crucial to seek fundamentals of management such as epistemology and logic structure. Management is very unique and should not be a sub-set of other disciplines such as literature, economics, mathematics, and psychology. Chinese martial arts will sustain because of its uniqueness as well as systematic understandings in terms of strengths and skills. Discipline is no different. Independence of management cannot be achieved without a unique epistemology and logic to understand the world. It is not useful to solely adhere to big names or disciplines. Management is related to subjects such as culture, mathematics, and psychology. However, there will be a lack of essence if simply combining pieces of these disciplines and associated theories. According to many Western people, Confucianism represents Chinese culture. However, Confucianism does not pay attention to business and competition. Due to the loose connection between Confucianism and business administration, it is highly ineffective to use those concepts for business issues. Confucius emphasizes Humanity. By contrast, The Art of War opened with “All warfare is based on deception” and everything in the book is about competition. Boots are for feet no matter how new it is; hat is for head no matter how old it is. Similarly, it is not appropriate to use Confucianism for military purposes or to use The Art of War for scholarship or Self-cultivation. It is necessary to find a management-oriented logic to connect all useful theories and methods. The process of management and governance is the process of dealing with contradictions. Changes result in not only innovation but also contradictions for management. Dealing with these contradictions justifies the existence of projects and presents significant challenges to managers. Both project management and project governance need to solve the contradictions between changes and stable strategies, i.e. a series of contradictions between changing and not changing; between static and dynamic. The value of project management is the management of changes: to improve the efficiency and reliability of completing tasks in the dynamic environment by controlling changes. The purpose of project governance is to provide a feasible regulated environment. The main functions of project governance are to (1) capture opportunities, (2) identify new partners, (3) define new rules in the changing social and business environment. Project governance faces greater difficulties and will have more influence when resolving these contradictions than project management. Chinese are very good at dealing with contradictions as well as creating contradictions. Because the Chinese are good at creating contradictions, they are very good at fixing these issues. Similarly, because the Chinese are good at dealing with contradictions, they are good at creating more challenging contradictions. As a philosophy source of the Chinese culture, I CHING is the masterpiece of explaining the strategic relationship between changing and not changing. It is also a “bible” of forecasting, analyzing, and dealing with contradictions. In the traditional Chinese community, I CHING is at the top of all theories. Consequently, many philosophies have developed such as Confucianism, Taoism, Legalism, Military strategist, and Mohism. The fundamental of I CHING is to classify all changes into several systems consisting of two conflicting basic units (i.e. Yin and Yang). The evolution

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of these systems is according to inherent relationships featured with the unity of opposites. The fundamental of traditional Chinese wisdom is “One is divided into two which is combined into three.” One refers to one kind of contradictions; two refers to two forces which create contradictions; three refers to the third force emerging from the two forces, which can be used to effectively resolve the conflict. This often creates the misconception that the Chinese culture is hard to understand and the logic is confusing. In this book, such a way of thinking to identify and deal with management contradictions is called Taiji logic. The fundamental of Taiji logic is seeking the truth from facts, with the biggest enemy of dogmatism. There are three pillars of Taiji logic: (1) identifying contradictions according to fundamentals of unity of opposites (Yin and Yang); (2) identifying the best timing to resolve contradictions according to evolution law of Taiji logic; (3) finding the solutions by using Zhongyong way of thinking to balance all stakeholders’ demands. The reason to emphasize Taiji in this book is that the Chinese see the essence of contradictions as the outcome of contradictions of two conflicting yet harmonizing power (i.e. Yin and Yang). Meanwhile, the timing of dealing with these contradictions is during the Taiji phase. There are many different understandings of Taiji. It is very common to mystify it to myths like “Tao that can be described is not universal and eternal Tao”. In this book, the essence of Taiji was derived from the Boxing Theory of Taiji. In other words, Taiji is a period when the chaos is gradually dividing itself into two extremes, i.e. Yin and Yang. This presents the best opportunity to deal with contradictions by management measures. The efficiency and effectiveness of this period are very high while related parties are most likely to accept the solutions. It is one of the most crucial criteria to evaluate the level of Chinese wisdom by assessing the capability of identifying and controlling the Taiji phase. Project governance is the primary focus of this book. The attention was paid to major contradictions to be dealt with and way of thinking to deal with these contradictions. This book aims to help the readers to (1) better understand the Chinese wisdom to deal with issues associated with project governance; (2) effectively use Golden MEAN strategy when dealing with these contradictions; (3) improve the feasibility and effectiveness of project management; (4) facilitate the success of project and project management. First, this book described the fundamental dialectics behind the Taiji logic, i.e. unity of opposites. The misconception of the dishonesty of Chinese people could arrive if these fundamentals are not understood. Western society emphasizes company culture and management regulations. By contrast, the Chinese perceive that intangible rules are even more important than tangible rules. This is because intangible rules are more appropriate in identifying and dealing with emerging challenges that came from changes. Unlike natural scientists, the main sources of management contradictions are the differences in goals, resources, and perspectives between stakeholders. In other words, all contradictions are associated with people. The people-oriented approach is required for both identifying and dealing with contradictions. It is difficult to achieve an ideal win-win in management activities.

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Management personnel is always in an awkward position where one conflict is fixed and another is emerging. Therefore, it is imperative to understand those intangible rules and how these rules could be implemented in management activities. Second, this book regards stages in the life cycle of project governance as the Taiji stage of various contradictions. The value of Taiji logic is discussed from perspectives of identifying project opportunities, decision-making, establishing relationships amongst project stakeholders, and monitoring the project management processes. For instance, the combination of “Shi” and “Jie” was proposed during the identification of project opportunities and decision-making processes. “Shi” is to identify societal trends so that the project’s scope and opportunities can be determined. “Jie” is to judge the timing, pace, and business model of project initiation. This is derived from traditional Chinese politics and military strategists. There are many traditional Chinese sayings on identifying trends and contradictions: “most important is timing; of lesser importance are tactics”; “If a small army can exploit external forces to create favorable conditions, it will be able to acquire great energy”. These are common strategies that Chinese people used to identify trends and manage contradictions. Lastly, this book discussed the Zhongyong strategy to deal with major contradictions. Similarly, the application of Taiji logic in finding the balance between rigid management regulations and flexible leadership art is explained in detail. These wisdom are reflected in many traditional Chinese speaking such as “Yin and Yang are mutually complemented”, “the flexibility is better than too rigid”; “Being Sage Inside and Being Kingly Outside”; “Fish cannot survive in absolutely clear water. For the same reason, no company can bear one whose requirements are too harsh”; and “harmony in diversity”. These are the Zhongyong style of wisdom that is accumulated by Chinese people in the last centuries. This book focuses on “Dao” (principles) whereas other project management and governance books focused on “Shu” (strategies and tricks). Other books emphasized the approaches to project management and governance. By contrast, this book focused on the fundamentals of project management and governance. This book is useful to readers from both China and overseas. I have more than a decade of professional experience in research, consultancy, education, and training in the field of project management. I have been involved in thousands of projects and have been working with many management personnel from companies, industry, and government. It is not unusual that the Chinese management culture and Western management culture were not integrated effectively. As a result, the management process suffered from a low level of effectiveness and efficiency. Besides, it creates confusion and pain. This book helps readers to better understand the logic behind Chinese wisdom which also helps them to better understand the Western management theories and methods. Knowledge and action must go hand in hand. Just like the evaluation of cuisine are closely related to the cultural background of chef and customers, management is closely related to the cultural background of management personnel and those being managed. One of the most popular Chinese

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food is dumplings while pizza is one of the most popular fast food in Western countries. The differences between dumpling and pizza can arguably represent the differences between Chinese culture and Western culture. The delicious part of pizza is left outside in which the color and smell are attractive to customers. On the contrary, the delicious part of dumpling is left inside of skin which has no flavor at all. You will not be able to taste the delicious dumpling until you have to bite its skin. Indeed, it is a forewarning of failure if the inside was disclosed. It is very common that some like dumplings while others like pizza. In practice, people making dumplings must collaborate with those making pizza to create new cuisine. The cultural difference often results in contradictions in management theories, methods, and systems. Without a better understanding of cultural differences, it is difficult to remain calm and define solutions when contradictions emerge. Thousands of Chinese people study in the United States, Europe, and Australia every year. Overseas channels such as HBO, NHK, and BBC are available in top Chinese hotels. Many of my overseas friends show their appreciation of the Chinese culture, e.g. traditional arts, Taiji boxing, and using a quotation from Confucius and Lao Zi. Everyone is interested in understanding each other and cooperate. However, most of the exchange in culture is undertaken at the social or cultural aspect, rather than for business and management. Many MBA programs in Chinese institutions are based on Western management theories and methods. This helps Chinese managers to understand the Western management style. However, very few Western managers understand the culture of business and management in China. Many papers from China have been published in international management journals and their research methodology is based on Western management theories. As a result, the conclusion from these papers can sometimes be misleading. The imbalance between the understanding of Chinese and Western business and management culture is harmful to the competition and cooperation in business and management. Developing China needs to understand the rest of the world and vice versa. China has the largest population and the second-largest GDP. China has provided the best market and development opportunities for the rest of the world. Similarly, as the largest developing country over the world, China has the highest level of intensity in terms of development. The development of China relies on various types of projects to a large extent. These projects will not be successful without the support of international advanced technologies, management, funds, human resources, and information. In other words, China and the rest of the world are stakeholders of each other. China and the rest of the world must understand each other. This is essential for both competition and cooperation. Even for competition, you will never be defeated if you know the enemy and yourself very well. I would like to show my gratitude to my colleagues from when I worked in the final review committee of the IPMA Project Management Excellence and the PMI Global Accreditation Committee. The communication with them helped me to better understand the management logic in various cultural backgrounds. Meanwhile, I would like to thank all project managers I have been working with and who evaluated from Indonesia, Romania, Nepal, Iran, Russia, Italy, and the

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United States. I would like to thank those students I have taught from Hunan University, Shanghai Jiaotong University, Shandong University, Southwest Jiao Tong University, Macau University of Technology, Politecnico di Milano and Heriot-Watt University. Their practices have provided numerous and vivid project cases to me which also served as validations for the Taiji Logic proposed in this book. Especially, I’d like to give my appreciation to those experts who proposed their comments for the chapters in this book, which will give the readers different perspectives or/and inspirations for their understanding of the Taiji Logic. These experts are from different cultures and professional background, even their comments are in the pages not so many as the main contents of the chapters, their insights are with the same or even better value for the readers. They are Mr. Reinhard Wagner (German), Ms. Pau Lian Staal, Mr. Erik Masson (Sweden), Prof. Antonio Calabrese (Italy), Prof. Leon Pretorius (South Africa), Prof. Vladimir Obradovic (Serbia), Mr. Brian Cracknell (Malaysia/UK), Prof. Constanta Bodea (Romania), and Prof. Shaopei Lin (China). I would like to acknowledge the National Natural Science Foundation of China for supporting my related research (71572094), my colleagues Dr. Tao Sun, Dr. Hua Sun, Dr. Yin Li, Dr. Lei Wang, and my students Shaochong Gao, Lei Xu, Zhixue Liu, and Yuxuan Song. They shared my daily workload so that I can afford more time on thinking. I also appreciate students, who are from 36 countries, of Master of International Project Management at Shandong University. Teaching in these project management classes provides a laboratory to test whether Taiji Logic is appropriate in different cultural contexts. This book is dedicated to my wife and my son. I greatly appreciate their support for my work. Wish you a pleasant experience of reading this book. Jinan, China December 2019

Ronggui Ding

Introduction

Every person will observe and understand the world with their logic. With different logic comes different perspectives and methodologies. Managers need a set of logics that distinguish themselves from other professionals, which is the Taiji logic. Projects are born from changes and changes are born from unity of opposites, i.e. Yin and Yang. An effective project governance system is to foresee major conflicts in project governance and resolve these conflicts at the appropriate time in a way that can be accepted by both parties. The best time to resolve conflicts is at the Taiji period when the two sides forming the conflict are transforming from a harmonious entity (Wuji period) to distinct Yin and Yang (Liang Yi period). The essence of Chinese project governance wisdom is to capture those Taiji periods, follow the strategy of Zhongyong (the golden mean), and guide the Yin and Yang force forming the conflict so that not only the conflict can advance project development but also the conflict can be resolved before it erupts. That way the dynamic harmony of the project governance system can be achieved and project stakeholders' needs can be maximally satisfied, which a state of “After the Herculean task is done, people will say, ‘We are like this naturally.’” can be reached. The “Taiji logic” is dialectical thinking unique in Chinese culture, based on balancing certain relevant interests. Discovering conflicts based on the principle of the unity of opposites, identifying the best timing to resolve conflicts based on the transformation pattern on Yin and Yang in Taiji, and developing a way of resolving conflicts with the detour and replacement method from Zhongyong and balancing needs of stakeholders are the three pillars of Taiji logic. This book includes answers to the following questions: What is the basic idea of Taiji logic? How to discover major conflicts in every stage of project governance? How to identify the timing to resolve conflicts? How to form the force to resolve conflicts? etc.

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Introduction

Integration and clashes of different cultures make our world diverse and colorful but also full of conflicts. Taiji logic provides effective Chinese philosophical ideas and practical methods to resolve conflicts in project governance. If cultures are too complicated that we are easy to fall in various management theories, methods, and the practical jungle state of the VUCA era, clarifying the logic of working can be a clear and feasible path to lead us out of the jungle. In simple words, Taiji logic can enable us to perform management work with higher efficiency and composure.

Contents

. . . . .

1 1 4 9 12

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19 19

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23 27

1 Taiji Logic Used to Deal with Management Contradictions . . . . Dialectics Is Required to Solve Management Contradictions . . . . . . Yin Yang Dialectics Embedded in I Ching . . . . . . . . . . . . . . . . . . . Taiji Provides the Best Timing for Conflict Solving . . . . . . . . . . . . Zhongyong (Golden Mean) Is the Key to Solve Managerial Conflicts 2 Project Value Is Always Associated with Contradictions . . . Contradictions in PPP Projects . . . . . . . . . . . . . . . . . . . . . . . . Contradictions in the Project Decision-Making Process of Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contradictions in Project Governance and Project Management .

3 Project Opportunities Derived from the Interactions Between Internal and External Contradictions . . . . . . . . . . . . . . . . . . . . . Exploring Opportunities Is Driven by the Desire of Solving Internal Contradictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Potential Opportunities of the Project Exist in the Evolution Trend of Contradictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Timing Is Important for Project Initiation . . . . . . . . . . . . . . . . . . . .

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35

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35

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41 46

4 Balancing the Public Interests and Private Interests of Project Stakeholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Public Interests Are Derived from the Collection of Private Interests . Unity of Opposites Between Behaving and Doing Things . . . . . . . . . Risks Are Associated with Feasibility . . . . . . . . . . . . . . . . . . . . . . . Democratic Centralism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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51 51 54 58 62

5 Integrating Productive Forces and Relations of Production Team Is Superior to Individuals . . . . . . . . . . . . . . . . . . . . . . . It Is not Necessary to Have Both Virtue and Talents . . . . . . . One Person Will not Be Talent Without Competency . . . . . . .

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67 67 73 80

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Contents

6 The Harmony in Diversity for the Integration of Project Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Matching Administrative Talents with Scientific and Technological Talents in the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Integration of Formal and Informal Organizations . . . . . . . . . . . . . . Intangible Resources Are not Less Important Than Tangible Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 An Appropriate Use of Empowerment and Incentives . . . . . From Project Performance Appraisal to Project Performance Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Converting Objective Data to Information Needed for Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Both Pre-event Measures and Post-event Measures Are Crucial .

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87 93

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. . . . . . 103 . . . . . . 103 . . . . . . 109 . . . . . . 114

8 The Unity of Opposites Between Projectization and Deprojectization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . It Is Crucial to Develop the Project Governance Platform . . . . . . . Collaboration Between Temporary Projects and Stable Functional Departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fulfilling the Unique Needs with Standardized Efficiency . . . . . . . Dedicating Valuable Experience Can Be Integrated with Knowledge Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . 121 . . . . 121 . . . . 125 . . . . 131 . . . . 135

9 Avoiding Weaknesses Associated with the Taiji Logic . . . . . . . . Focusing on the Current Contradiction Between Yin and Yang Could Easily Lead to Myopic Management . . . . . . . . . . . . . . . . . . Opportunities Missing Due to the Conservative Attitude to Discover the Secret Information in the Taiji Stage . . . . . . . . . . . Zhongyong Oriented Flexibility Will Likely Weaken the Principles .

. . . 141 . . . 142 . . . 146 . . . 150

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

About the Author

Dr. Prof. Ronggui Ding is a professor on project management of the School of Management in Shandong University, China. He is the global research coordinator of International Project Management Association (IPMA), and an advisory committee member of Engineering Management Education in the Ministry of Education of China. From 2006, he has been working for IPMA as a PE Award assessor, Team-Leader-Assessor, PE Award Management Board member, a PE Award judge, etc. He set an International Master Program on Project Management in Shandong University in 2015, and is a Chinese board member of the Global Accreditation Center of Project Management Institute (PMI). As the Editor-in-Chief of Project Management Review, he is promoting project management new ideas, cases, approaches, and philosophies in China and the world. He was honored as an Excellent Talent in the New Century by the Ministry of Education of China in 2007.

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List of Figures

Fig. Fig. Fig. Fig. Fig. Fig. Fig.

1.1 1.2 1.3 1.4 1.5 1.6 2.1

Fig. 2.2 Fig. 2.3 Fig. 2.4 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4 Fig. 3.5 Fig. 3.6 Fig. 3.7 Fig. 4.1 Fig. 4.2

Fig. 4.3

Three meanings of “Yi” in I Ching . . . . . . . . . . . . . . . . . . . . . The relationship of Western and Chinese dialectics . . . . . . . . . The relationship between Wuji, Taiji and Liangyi . . . . . . . . . . The ideal state of development of things . . . . . . . . . . . . . . . . . Using three basic criteria of Zhongyong . . . . . . . . . . . . . . . . . . Three supporting points of Taiji logic. . . . . . . . . . . . . . . . . . . . Contradictions between government and enterprises in PPP projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Common contradictions between shareholders and operators of enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contradictions between project governance and project management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The boundary between project management and project governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project opportunities from the matching of internal and external causes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The project is based on resolving enterprise contradictions. . . . The larger the search horizon, the more opportunities for discovering projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Identifying project opportunities requires to understand customer’s needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The sources of enterprise profit. . . . . . . . . . . . . . . . . . . . . . . . . Investment strategies of enterprises . . . . . . . . . . . . . . . . . . . . . . Tendency of automobile sales and maintenance in the Chinese market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VUCA World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Integration of public interests with the private interests of stakeholders. A Needs of stakeholder 1 private interests B Needs of stakeholder 2 private interests C Needs of stakeholder 3 private interests D Needs of stakeholder 4 private interests . . Iterative process to identify project stakeholders’ needs . . . . . .

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5 8 10 11 16 17

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List of Figures

Fig. 4.4 Fig. 4.5 Fig. 4.6 Fig. 4.7 Fig. 5.1 Fig. Fig. Fig. Fig. Fig. Fig.

5.2 6.1 7.1 7.2 7.3 7.4

Fig. 8.1 Fig. 8.2 Fig. 8.3 Fig. 9.1

Project networks amongst various project stakeholders . . . . . . . The feasible project comes from the intersection of project feasibility study and risk study . . . . . . . . . . . . . . . . . . . . . . . . . Mapping relationship between stakeholders in contracts . . . . . . Organizational relationships between various project governance roles in multi-enterprise environment . . . . . . . . . . . Project team links project productivity with project production relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Types of project teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . “Community” between formal and informal organizations . . . . Fundamental value of performance management . . . . . . . . . . . Meaning of project risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Procedures for project change management . . . . . . . . . . . . . . . Project evaluation, rewards and punishments connect past with future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Project process calls resources from “resource pool” . . . . . . . . PMO is used to maintain a balanced relationship between project department and resource department . . . . . . . . . . . . . . . Vicious circle of enterprises’ over-dependence on compound talents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Overall project benefit is lost due to pursuing local benefits . . .

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. 68 . 76 . 98 . 105 . 108 . 114

. . 116 . . 128 . . 129 . . 136 . . 143

Chapter 1

Taiji Logic Used to Deal with Management Contradictions

Those who make the car want others to be rich, they worry that others are not rich and no one buys a car; those who make bows and arrows hope that their arrows can kill people so that others can buy their arrows. Is it true that the people who make cars are good-hearted and the people who make the arrows are bad? No, absolutely not, they are all for their own benefit. The purpose is the same, but the occupational and technical division of labor has led them to different ways to achieve their own profits. “Long and Short Sutra” by Zhao Rei (659–742)

The most important job of managers is to identify and solve various contradictions that are difficult to be dealt with via existing measures. This is particularly the case for those contradictions amongst people, between people and organization in terms of objectives and resources. In certain circumstances, managers have to create some contradictions so that these contradictions take place with a manageable pace. As a result, contradictions could be solved without detrimental effects. It is worth noting that contradictions are not objective by nature; the awareness of contradictions varies according to each individual. There are so many different kinds of contradictions and it would not satisfy manager’s need to simply rely on the general guidance such as “detailed analysis for each specific problem” as this would not satisfy manager’s demand. Taiji logic is the fundamental principle for managers to identify and solve contradictions. Similarly, it is a key criterion to distinguish managers from other professions.

Dialectics Is Required to Solve Management Contradictions In his book “To those who hate mathematics”,1 Naoki Komuro claimed that the reason why China is lagging behind in the science and technology can be explained by the lack of scientific fundamental logic, i.e. form logic. According to him, this can explain why China is lagging behind in the science and technology. There are three types of laws under the form logic, i.e. Law of Identity, 1 Written

by Naoki Komuro, translated by Li Yizhao, Harbin: Harbin Publishing House, 2003.

© China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_1

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Law of Contradiction, and Law of Excluded Middle. These laws make mathematics more precise which pave the way for modern science and technology. According to him, the Chinese logic is based on speculation with the aim of convincing others to accept an opinion. Apparently Komuro has not realized the fundamentals of the Chinese logic. Aristotle (384 BC–322 BC) of ancient Greek is the founder of form logic in Europe. He developed the first ever logic system, i.e. syllogism. His representing work on form logic include Organum and Metaphysic. Fundamentals of the form logic are three types of laws, i.e. Law Of Identity (A is A, implies A is not B), Law of Contradiction (either A is B or A is not B), and Law of Excluded Middle (it is either true or false that A is B).

Form logic is the foundation of natural science. In other words, whether or not a statement is true does not depend on any individual’s subjective views. By contrast, dialectics requires a systematic and dynamic view of the problem, highlighting that a certain truth in a certain context. Georg Wilhelm Friedrich Hegel (1770–1831), a German philosopher described three laws of form logic in his classical book, Science of Logic. Friedrich Engels (1820–1895) elucidated the key points of that book as below: There are three fundamental laws for dialectics: (1) The law of the unity of opposites; (2) The law of the passage of quantitative changes into qualitative changes; and (3) The law of the negation of the negation.2

The law of the unity of opposites defines a situation in which the existence or identity of a thing (or situation) depends on the co-existence of at least two conditions which are opposite to each other, yet dependent on each other and presupposing each other, within a field of tension. The law of the passage of quantitative changes into qualitative changes defines that a change in the quality of an object occurs when the accumulation of quantitative changes reaches a certain limit. This law reveals the most general mechanism of development. The law of the negation of the negation expresses the notion of development. Instead of a closed circle, where processes continually repeat themselves, this law points out that movement through successive contradictions actually leads to development, from simple to complex, from lower to higher. Processes do not repeat themselves exactly in the same way, despite appearances to the contrary. These, in a very schematic outline, are the three most fundamental dialectical laws. Arising from them there are a whole series of additional propositions, involving the relation between whole and part, form and content, finite and infinite, attraction and repulsion and so on.

2 Chen

Shiqing: “The Metaphysics of Economics”, Beijing: China Times Economic Publishing House, 2010.

Dialectics Is Required to Solve Management Contradictions

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Form logic aims to achieve reliable and effective conclusions through a process without contradictions. By contrast, dialectics acknowledges the existence of contradiction and treat it as the subject of research. Those “reliable” or “effective” conclusions achieved from form logic analysis are considered as problematic in dialectics. Some problems include: only quantitative nature was considered, only a proportion of system was considered, dynamic nature of the system is not taken into account, complex interactions of all sorts of contradictions were not considered. Dialectics acknowledges the relative truth, e.g. relative motionless could exist despite absolute movement, the definite accuracy of one thing in a certain context. The well recognized phrase that “Management is a science as well as an art” embeds dialectics. Management is closely related with human beings, which makes it difficult to become a science. Unlike the field of economics, which human being is treated as an abstract, communal research subject, management regards human being as specific and unique. Despite being the most precious resource to the organization, human beings are most difficult to be standardized due to severe uncertainty. This will remain a challenge for the foreseeable future. It is not difficult to locate one or more counter examples for any existing management method, principle and theory. In such context, it is not appropriate to use formulaic methods to investigate management issues due to the low reliability. One of the most fundamental formulaic methods is mathematics. As a scientific language, mathematics has various advantages such as presenting human being’s idea concisely and accurately. However, it is not realistic to expect the reliable result if such scientific language is used in an environment featured with a high level of uncertainty (e.g. dealing with various stakeholders). It is not unusual that management studies start with unrealistic assumptions and idealistic boundary conditions. Theoretical outcomes of these studies are based on a series of simplified mathematical equations. The applicability of these outcomes is generally poor. Indeed, it warrants caution when forcing mathematical methods in the management research. Management research should not be a colony of Mathematics. The artistic of management is due to the consideration of human beings. It is not unusual that some management studies were based on the direct quotation of some experts. Caution is required for such research methods using individual experience and judgment rather than scientific methods. We might admire those famous experts and their successful management cases derived from the fundamental of “management is an art”. However, when attempting to apply these research outcomes into our practices, sooner or later we will discover their artistic characteristics, i.e. not repeatable. Superstition is derived from a lack of understanding. We employ superstitions to explain phenomenon that is beyond our knowledge. Similarly, the artistic of management exists due to the lack of understanding of management. The dichotomy of management has negative impacts on the education, research and practices in the field of management. Such impact is long term. It is the mainstream approach to educate students in management programs in universities relying solely on the scientific aspect of management. As a result, most students (especially undergraduate students) felt that they have not learned how to manage, and thus

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lack of competitiveness after the graduation. On the contrary, the artistic characteristics of management was exclusively emphasized in training programs that aim to develop management personnel. Trainers are very good at telling a good story of management cases but very few trainees are able to apply those successful cases into practices. Sometimes the artistic characteristics of management was blamed for being responsible for the management failure. The form logic is based on the law of nature and provides the foundation to science and technology. By contrast, dialectics logic is based on the law of social development and provides foundation to socio-economic development. Indeed, management personnel is generally familiar with dialectics logic. In other words, dialectics becomes form logic when applying constraints such as timing. Form logic is a special form of dialectics, featured with static. Concepts, judgments and reasoning are considered as stabilized forms in form logic. Law Of Identity way of thinking is adopted in form logic. On the contrary, concepts, judgments and reasoning are considered as dynamic in dialectics. It is imperative to recognize the important role of dialectics so that the development and evolution of society can be better understood. Like Engels pointed out in the Dialectics of Nature, dialectics is the development and sublimation of form logic. When denying form logic, dialectics is subjected to the danger of sophistry, which denies relative motionless and truth under context; when denying dialectics, it is hard to see the development and revolutions of society and truth.

Yin Yang Dialectics Embedded in I Ching The Chinese dialectics is rooted in I Ching. I Ching is the ancient Taoist Philosophy with the oldest history which did not solely derive from Lao Tzu during the Spring and Autumn period. According to Joseph Terence Montgomery Needham,3 the most attractive features of Chinese characters derive from Taoist Philosophy. As the foundation of Chinese culture, Taoist Philosophy has been reflected in other avenues such as Confucianism, Militarist and Chinese Buddhism. Taoist Philosophy describes the fundamental principles within the natural system. Confucianism reflects the human society, especially laws between individuals, between individuals and the nation, between individuals and the society. In other words, Confucianism is included in

3 Joseph Needham (December 9, 1900–March 24, 1995), a British modern biochemist and expert in

the history of science and technology. His book “Science and Civilization in China” (“The History of Science and Technology in China”) on Modern Chinese and Western Cultural exchanges have far-reaching implications.

Yin Yang Dialectics Embedded in I Ching

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Fig. 1.1 Three meanings of “Yi” in I Ching

Taoist Philosophy and The Taoist concepts represented by Tao Te Ching4 at the end of the Spring and Autumn period only forms a part of Chinese Taoist Philosophy.5 I Ching is well recognized as the most important representative of the Chinese culture. There are three meanings of “Yi” in I Ching6 (Fig. 1.1). The first meaning is simplicity, i.e. simply or easy. As Confucius said: “Heaven is responsible for everything with change, and the earth is simple to accomplish things. By recognizing the laws of change, it is easy to grasp, and it is easy to make people comply with simple expressions.” I Ching mainly describes the most fundamental law of nature via two simple symbols (i.e. Yin and Yang). Via the permutation and combination of these two symbols, I Ching reflects the world and predicts the evolution. The European dialectics (philosophy of the unity of opposites) is embedded in such a simplified representation. According to I Ching, everything can be regarded as a harmonized operation of Yin and Yang. Artificial Intelligence has attracted wide attention. However, AI has to be achieved via fundamental machine language which 4 Tao

Te Ching is a book written before the separation of the pre-Qin dynasties in ancient China. It was praised by the philosophers of the time. The legend is written by Laozi in the Spring and Autumn Period and is an important source of Taoist philosophy. The text is based on the philosophical “moral”, which discusses the ways of self-cultivation, ruling the country, using soldiers, and maintaining health. It is mostly based on politics. It is the so-called “inner and external king”, which is profound. 5 Harold Koontz (1908–1984), a US-based management scientist, believes that modern management theory is still in the “jungle” state. Similarly, the debate about Taoism, Confucianism, and interface has not been ended in the history of Chinese philosophy. It can also be expressed in the state of “jungle”, which can be described as “the benevolent sees benevolence, the wise sees wisdom”. This book places more focused on finding a way out of these “jungle” rather than classifying these “jungles”. 6 Zheng Xuan, the Eastern Han Dynasty,said in “I Zan” and “I Theory”: “The first meaning of ‘Yi’ is simplicity, The second meaning is Changing Yi, The third meaning is no changing.”

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consists of two parameters, i.e. 0 and 1. This also reflects the fundamental philosophy of the unity of opposites embedded in I Ching. Such coincidence might be the lessons learnt from I Ching. The second meaning is Changing Yi, i.e. I Ching is talking about changes. The English Translation of I Ching is The Book of Change. I Ching describes the principle of change and revolution, i.e. “When it is exhausted, it mutates; by mutation it achieves continuity; by continuity it endures long.”7 Such changing view between Yin and Yang always takes dominance position in Yi Xue history. No change, no I Ching. Changes reflected in the philosophy of I Ching can be explained by “the quantitative change transforms to the qualitative change” and “the negation of negation” in contemporary dialectics. Meanwhile, it places emphasis on the objectiveness of changes as well as the positive impacts of changes to the socio-economic development. Consequently, I Ching proposes the methods and approaches to facilitate changes, i.e. proactively breaking the balance between Yin and Yang so that a new balance can be achieved. The third meaning is “no changing”. I Ching describes the inter-transformation between Yin and Yang. However, these principles are forever, i.e. no changing. The reason I Ching can be summarized as a philosophy book is due to those fundamental principles of the nature in that book. These principles will not change according to time and context. In other words, I Ching reflects the universality within the particularity within nature. Without acknowledgement of this, we are easy to get lost within each individual phenomenon. The “not changing” and “Changing” embodied in I Ching also reflect the law of the unity of opposites. Therefore, the essence of I Ching is to treat all changes to a series of systems that consist of two fundamental yet conflicting units, i.e. Yin and Yang. These systems went through evolution process according to the law of the unity of opposites. I Ching can be used to predict changes as the evolution trend can be measured via the law of the unity of opposites. I Ching is a book describing the unity of opposites; and a “bible” Chinese use to predict, analyze and solve conflicts. Indeed, we can treat I Ching as the foundation of Chinese dialectics logic, i.e. using Yin and Yang, the simplest and most fundamental unity of opposites to explain all changes and guide future changes. Most of ancient philosophies were derived from I Ching. The Chinese dialectics8 is based on I Ching, which differs from western dialectics. The major differences between Chinese dialectics and western dialectics are as follows: First, Chinese dialectics pay more attention to the particularity of people. China is featured with a society full of human relationships. The judgment of correctiveness is not fully dependent on objective facts. Rather, a unique logic is adopted which is a combination of favor, reasoning and law. Compared to form

7I

Ching, “Hsi Tzu”.

8 Some people use “dialectic” instead. Although there are some differences between these two terms,

their essential characteristics remain the same. Therefore, these two terms are used interchangeably in this book.

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logic, Chinese are more capable of using dialectics according to a comprehensive consideration of status and benefits. Human factors have to be taken into consideration when explaining social phenomenon. In western dialectics, the human race is considered as a whole unit. The social governance reflects the overall rule and fairness. Meanwhile, the particularity of individuals was not taken full consideration. On the contrary, Chinese dialectics considered human as a dynamic balance between entirety and individuals. Both western people and Chinese advocate equality before the law. However, Chinese place more focuses on favor and uniqueness of each individual. Each specific question needs to be analyzed specifically. For the fairness, subjective cognition is perceived more important than the objective evaluation. As a result, Chinese dialectics emphasizes the level of acceptance of the logic analysis; different people would have different level of acceptance to the same analysis. Chinese pay more attention to presenting the logic, or the way of persuasion, with many books dedicated to analyzing ways of persuasion in Chinese history. A number of classic cases were reported in Strategies of the Warring States.9 It is clearly shown in Strategies of the Warring States the logic Chinese use to analyze and solve problems. Compared to dialectics logic proposed by Georg Wilhelm Friedrich Hegel, Chinese dialectics logic emphasizes more on the adoption of logic, rather than its rationality and reliability. In other words, the focus of Chinese dialectics logic is not on the interrelationship between facts. Rather, the relationship between the sending and receiving message is more important. Therefore, the Chinese dialectics is more subjective, which matches the unique characteristics of management. There is no fact itself, only the way it is spread. People only live in the world of language communication, and communication determines the truth. As a means of communication, language plays a dominant, changing or even subversive role in the truth. Strategies and eloquence complement each other and promote each other. The strategy is because of eloquence. The strategy is used to plan and find solutions to problems, and eloquence is used to achieve planning and to solve problems directly by persuading others. The fundamental of using strategy and eloquence lies in the grasp of human nature. —“Strategy and Eloquent Collection: A Comprehensive Analysis of the Essence of Warring States” by Hei Shi10

Second, Chinese dialectics pay more attention to the particularity of changes. Although laws of “the quantitative change transform to the qualitative change” and “the negation of negation” in western dialectics also imply changes, Chinese dialectics further specifies the unified law which reflects all changes. More emphasis is placed on the specific drivers to these changes. 9 Strategies of the Warring States is a historical work. It is a national history book, also known as the

“national policy.” It records the events of the Eastern Zhou Dynasty, the Western Zhou Dynasty, and the Qin, Qi, Chu, Zhao, Wei, Han, Yan, Song, Wei, and Zhongshan states. The period begins in the early years of the Warring States Period and ends in the Qin Dynasty. It has a history of 240 years. It is divided into 12 strategies, 33 volumes, and a total of 497 articles. It mainly describes the political opinions and words and deeds of the lobbying people during the Warring States period. It is also a practical manual for lobbying people. 10 Beijing: China Theater Publishing House, 2003.

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Fig. 1.2 The relationship of Western and Chinese dialectics

Chinese dialectics is a kind of logic which is according to the balance between status and benefits. This logic facilitates the judgment for the tradeoff between A and B, two conflicting conditions. Chinese dialectics is elastic and changes in presentation. On the surface, it could be misinterpreted that Chinese has no logic or confusing logic. One of common Chinese speakings is: “Everything has the right to go”.11 This reflects that a fundamental principle to deal with changes is to be flexible. Dialectics incorporates the subjective variables such as the judgment of human beings to the status and benefits in specific context, making the Chinese dialectics more rich and colorful, but also complicated and confusing (Fig. 1.2). The situationoriented individual judgment varies according to the mood of the decision maker. These variables make the logic process difficult to understand by foreigners. Similarly, Chinese also feel confusion in the principles of logic and behavior. This may lead to misconception that Chinese are lack of consistency. Confucian Analects12 is very popular in China. It documents the dialogue between Confucius and his students in specific contexts. It is necessary to consider the specific context rather than using Confucius’ statements as guidelines for all situations. Otherwise it is possible that Confucius’ statements are conflicting with each other. Zhao Rui of the Tang Dynasty wrote the book “Long and Short Sutra,”13 in which one 11 I

Ching, “Hsi Tzu”.

12 A set of essays in Chinese quotations during the Spring and Autumn Period that mainly records the

words and deeds of Confucius and his disciples. It reflects Confucius’s thoughts more concentratedly. It was compiled by Confucius disciples and re-disciplined disciples. The book consists of 20 chapters and 492 chapters, and it is the first to create the form of “quotation”. In the Southern Song Dynasty, Zhu Xi called it “The Four Books” together with “Mencius“, “Da Xue” and “Zhong Yong”. 13 “Long and Short Sutra,” also known as “Fan Jing”, is a practical book written by Zhao Rui of the Tang Dynasty. It uses the history of the Han Dynasty before Tang as the material of argumentation, and integrates the teachings of the philosophers, integrating the ideas of Confucianism, Taoism, Buddhism, Law, Yinyang, and Agriculture. The content of the lectures covers various fields such as politics, diplomacy, and military affairs. To form a tactical system with a strict logic system covering the literary and military strategy. It is known to all the emperors who have achieved political achievements in the past, and is honored as a small “Comprehensive Mirror for Aid in Government”, which is a treasure in the rich and profound traditional culture of the Han nationality.

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chapter devoted to “right and wrong”, that is, the opposite viewpoint of celebrities in history books about some things. Indeed, it is a common phenomenon that statements made by famous philosophers are conflicting with each other. For example, Chinese believe “In all things, success lies in previous preparations and there will be failure without previous preparations.” Similarly, they believe “there’s always a solution to any problem when the problem is coming to you”. This is because the Chinese dialectics is based on the individual judgment based on specific situation and benefits.

Taiji Provides the Best Timing for Conflict Solving The uniqueness of Chinese dialectics is mainly reflected in how to resolve contradictions. Chinese are good at not only dealing with contradictions, but also creating contradictions. Indeed, Chinese are capable of solving contradictions because they are good at creating contradictions, and vice versa. The use of dialectics logic is fully incorporated in the strategy that Chinese use to identify and solve contradictions. This is reflected in all Chinese ancient philosophers’ theories which have been used to deal with contradictions related to politics, military, economy and society. The dialectics logic has been widely used to interpret and improve the world. The wisdom is also called stratagem in Chinese community. A best example is Thirty-Six Stratagems,14 which is based on Chinese dialectics. In this book, a number of laws and theories related to Chinese dialectics were represented. For instance, “The secret is hidden in the exposed things, not in the open form” in “Shu Shang Kai Hua” strategy reflects the law of the unity of opposites; “in the event of loss, we must sacrifice local losses in exchange for the overall advantage” in “Li Dai Tao Jiang” strategy reflects the law of law of negation of negation; “someone will likely to lose concentration if s/he perceived being well prepared” in “Man Tian Guo Hai” strategy reflects the law of the passage of quantitative changes into qualitative changes.

As aforementioned, Chinese dialectics introduces two unique phrases which reflects the situation variable, i.e. Shi and Jie. Shi means trend, which can be represented as Timing. Jie means the specific timing and tempo. Jie is embedded in Shi. Therefore, Shi and Jie can be integrated into one variable, which controls the passage of quantitative changes into qualitative changes. As stated in The Art of War,15 14 “Thirty-Six Stratagems“ refers to the thirty-six military law strategies of ancient China. It is orginzted from the Northern and Southern Dynasties and the books were written in the Ming and Qing Dynasties. It is a book based on military thoughts and rich experience in ancient China. 15 “The Art of War” is also known as “Sun Zi” written by Sun Wu. Sun Wu, a member of the state of Qi at the end of the spring and Autumn period, was exiled from the state of Qi to the state of Wu to assist the king of Wu in running the army through the state. He became famous as a prince and was honored as a “soldier saint”. The Art of War ar is known as “the holy book of military science” and “the first ancient military book”. It played an extremely important guiding role in the ancient military academic and war practice in China.

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Fig. 1.3 The relationship between Wuji, Taiji and Liangyi

“Energy may be likened to the bending of a crossbow; decision, to the releasing of a trigger”. Guan Zi16 also emphasized “The sage is able to take advantage of the times, but is never able to go against them. Knowledge is good for formulating stratagems, but it is not as good as being timely.” These fully endorsed the critical role of Shi and Ji. Chinese Kong Fu has drawn wide interests. Taiji, one of Chinese Traditional martial is the most direct and simple way of understanding how Chinese use dialectics to solve contradictions. The most common Kong Fu in western society is boxing, which is very different from Taiji. Boxing is more external oriented whereas Taiji is more internal oriented. A number of principles of Taiji (e.g. Combination of Virtualness and Reality; art is good for strength; Co-existing of Yin and Yang) reflect the fundamentals of Chinese dialectics. Although masters will always incorporate the essence of both external and internal methods, they will often have different emphasis. Chinese management wisdom mainly bases on the internal oriented principles. Some management methods can be classified as External oriented Kong Fu such as: power and regulations (tangible rules). On the contrary, other strategies can be classified as internal oriented Kong Fu as they use intangible rules (e.g. personality, virtue, leadership) to influence other people. Taiji boxing theory reflects not only the timing variable in Chinese dialectics but also the law of the transformation between quantity and quality in dialectics. Zhongyue Wang, the famous master of Internal Martial Arts during Dynasty Ming, published a book on Taiji boxing theory, which has been common read for practitioners. According to him, Taiji is the timing of taking actions. Such timing is the short period before Wuji is divided into two status, i.e. Yin and Yang (Fig. 1.3). Wuji can present an entity. Despite looking like harmony, two conflicts are embedded in this entity, i.e. Yin and Yang. The harmony is relative and conflicts are absolute. The relationship between Yin and Yang is unity of opposites. As shown in classic Taiji diagram, Yin and Yang are not actually exclusive to each other. The negation of negation exists between Yin and Yang. The wave or spiral escalation emerges due to 16 Guan Zi (723 BC–645 BC), the famous politician and military strategist of Qi State during the Spring and Autumn Period. He assisted Qi Qigong to dominate in the Spring and Autumn Period for the first time.

Taiji Provides the Best Timing for Conflict Solving

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Fig. 1.4 The ideal state of development of things

the dynamic relationship between Yin and Yang. Sometimes “going too far is as bad as not going far enough” between Yin and Yang due to changes to forces. When Yin and Yang present as the same status, the contradictions seem do not exist. However, when apparent disconvergence exists between Yin and Yang, quantity changes have led to quality changes. As a result, it is too late to solve those conflicts. Even though conflicts could be solved eventually, damage has been made which will lead to conflicts hard to deal with in the future. Therefore, the best timing to solve conflicts is the period of Taiji. During this period, conflicts are comparatively easier to be dealt with where harmony can be maintained. Taiji advocates skillful deflection and its essence is to find such best timing. The common Taiji diagram can clearly show an entity consists of two components (i.e. Yin and Yang) that are embedded within each other. However, fundamentally such a diagram displayed the Two Forms stage rather than the Taiji stage. In Two Forms stage, the conflicting parties have publicized their stands which makes it more difficult to solve those conflicts.

The capture and utilization of Taiji stage need not only the correct understanding of general trend but also the strong capability of judgment and speedy responses. In essence, the capability of identifying and solving conflicts is dependent on whether Taiji stage can be located. Therefore, this book is dedicated to the dialectics used to identify and solve conflicts is defined as Taiji logic. According to Taiji logic, the ideal status of everything is the iteration between Chaos and Taiji (Fig. 1.4). The master of solving conflicts are good at solving problems before they are felt by ordinary people. It is more effective and efficient to solve conflicts in such timing. It will be much more difficult to solve conflicts when they are publicized. As stated in the Art of War, “Thus the highest form of generalship is to balk the enemy’s plans; the next best is to prevent the junction of the enemy’s forces; the next in order is to attack the enemy’s army in the field; and the worst policy of all is to besiege walled cities. The rule is, not to besiege walled cities if it can possibly be avoided.” For the Best Ruler, people only know he is just there; For the Second to the Best, they are near him and give him praise, For the mediocre Ruler, all the people are in fear. But for the Least Able One, they insult him, ne’er hold him dear. Because he is not worthy of trust, Him, none of the people will ever trust!

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1 Taiji Logic Used to Deal with Management Contradictions The Best Ruler is so leisurely! Who is few in words, he’s the one. After the Herculean task is done, People will say, “We’re like this naturally.” Tao Te Ching, Laozi (B.C. 570?–?)

The judgment of Jie is not possible if Shi is not well understood. This is because Jie is simply a turning point for the development of Shi. It is necessary to understand the evolution trend of the entire system (i.e. the overall chaos) so that timing can be identified. As a result, the best solution can be defined. Skillful deflection does not simply mean the weak can defeat the strong. Rather, the essence is to locate the opposite’s weakness. Consequently, resources can be assigned to counteract the opposite’s weakness.

Zhongyong (Golden Mean) Is the Key to Solve Managerial Conflicts Chinese are generally reluctant to go extreme. They do not like to solve problem in a way that someone loses the face. The Zhong Yong17 principle defined in Confucius has deeply affected Chinese’s attitude and behavior towards conflicts. Yutang Lin, the Master of Chinese culture, believes that Zhongyong represents the wisdom of Chinese for day to day living.18 According to Confucius, Zhongyong is the fundamental principle of governance of people and country. Zhongyong defines the effective solution of accommodating all stakeholders’ benefits after clearly understanding the context and trend without taking the extreme path. No conflict could be solved without specific efforts. These efforts could be tangible such as materials, devices and facilities; or intangible such as power, emotion and culture. All these efforts are necessary resources to solve conflicts. According to Taiji logic, all these efforts can be made according to Zhongyong oriented dialectics via “one can be divided into two which can then be merged into three”. “One” indicates a kind of conflict. A number of conflicts may exist in any chaos system. However, there has to be a primary conflict which has a major aspect. The first step to deal with managerial issues according to Taiji logic is to identify such primary conflict and its major aspect. Consequently, corresponding managerial efforts 17 “Zhong Yong” is the representative work of the Confucian school. It was originally an article of the Book of Rites. It is generally believed to be written by Confucius‘ grandson (48–3 BC, 402 BC). “Zhong Yong” is not an unprincipled “harmony” and inaction. Rather, focus is placed on the inherent requirements of human beings (e.g. humanity, heart) as the starting point and fundamental value in the external environment (including natural and social). The pursuit of “middle point” in the environment. In other words, internal requirements are represented and achieved in an appropriate format under the context of existing external environment and conditions. 18 Lin Yutang: “The Wisdom of Confucius“, Beijing: Qunyan Press, 2010.

Zhongyong (Golden Mean) Is the Key to Solve Managerial …

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could be made. Without finding the major conflict, the energy of managers would be unnecessary consumed.19 The contradiction plays a crucial role in the existence and development of things. Complex things contain many contradictions. The main contradiction is the main basis for the existence and development of things. It determines the direction of the development of things; stipulates the existence and development of other contradictions. Grasping and resolving major contradictions can lead to and promote the resolution of other contradictions. Grasping the main contradiction to solve all problems is absolutely important. “On Contradiction” by Mao Zedong (1893–1976)

Fundamentally, managerial conflicts are the conflicts between people. Some conflicts may look like coming from funds, technology or devices. However, what behind these issues are always people, e.g. the conflicts on demands, value and roles between organizations, between organization and individual and between individuals. In other words, funds, technologies and device are not manageable by themselves. What can be managed are individual’s behavior. For managers, conflicts are subjective, which vary according to individuals. In addition, the understanding of conflicts varies according to different timing and post for each individual. In complex things, it is common that multiple conflicts intertwined. These conflicts vary according to the level of organizations and different timing. It is not realistic to expect that only one conflict exists solving one conflict can solve all problems. It is a non-linear and spiral escalation from harmony to conflicts and then back to harmony, which is a general law of organizational development. The identification of primary conflicts needs to locate two representative organizations or individuals. When we do business, we are dealing with specific individuals rather than with an enterprise, a school or a government department. It is necessary to convert general conflicts to those between individuals. Otherwise, conflicts will be too complicated and hence difficult to define judgment standards. “Two” indicates two forces which form the unity of opposites, i.e. Yin and Yang. According to the Taiji logic, every contradiction can be simplified as two conflicting aspects, i.e. Yin and Yang. In managerial contradictions, common Yin-Yang relationships include: the contradictions between organization and individual, reward and penalty, freedom and discipline, efficiency and profit, government and private sector, shareholders and management, employer and employees. Various drivers are behind these contradictions, which are related to either the benefit demand or value. Therefore, it is important to identify those drivers to contradictions to identify subjects need to be managed. Similar to identifying primary contradictions, various sources exist for the drivers to those contradictory phenomena. Managers should focus on these drivers following the principle of the unity of opposites. As a result, resources can be 19 In Western management, there are many similar cognitions, e.g. the “cask principle”. Theory of Constraints and its series of management novels developed by Eliyahu M. Goldratt are based on this idea.

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assigned to those key aspects which helps to improve the efficiency of contradictions resolution. The source of power to solve contradictions could be financial or even military forces. However, these are in essence the driving force related to the representatives of two conflicting parties. Resource does not necessarily mean the fund, staff or equipment owned by one person. Rather, it is a subjective utility which is a combination of rationality and emotions. For example, superpowers may show off their power by announcing the number of nuclear warheads they have. However, a terrorist organization with only one nuclear warhead may have more power than those superpowers in initiating or negotiating events. The unity of opposites also exists between the rationality and emotion when people making decisions. The balance of benefits is Yang, which is comparatively easier to analyze and judge. Emotional factor is Yin, which requires deep understanding of human nature and personality of decision maker. It is imperative to consider emotional factors of conflicting parties when solving contradictions. Human nature is complicated. In Chinese history, various assumptions were made for human nature.20 In fact, human nature can be considered as a combination of two aspects, i.e. intrinsic and extrinsic. Intrinsic human nature can be further deduced that human being is a kind of animal. Despite large difference from other animals, human being is still a kind of animal in essence. Therefore, the animality of human beings should not be overlooked. The fundamental of animality is instinct behavior derived from survival and reproduction, i.e. seeking benefits and avoiding harms. Extrinsic human nature is instinct habit which was developed and established from education and social experience. Extrinsic human nature is influenced by cultural background and institutional environment. For Chinese, this can be simplified as Mianzi (face saving). Mianzi is not only the self-perceived dignity but also the respect shown by others. In Chinese context, Guanxi (relationships) is not only a presentation of Mianzi, but also a way to realize the value of Mianzi. The intrinsic and extrinsic human nature presents the unity of opposites. There are two meanings of “Three”. First, it is the third force derived from balancing two primary forces which forms the major contradiction. Such force can not only effectively solve this problem, but also motivate two conflicting parties to accept the solution. Second, the third party could be introduced to solve such contradiction. This third party could be individual, or spatial or temporal resources. 20 During the Spring and Autumn Period and the Warring States Period (770 BC–221 BC), there were two representative hypotheses, namely, Mencius’s “human beings are born good” hypothesis and Xunzi’s “human beings are born evil” hypothesis. These two different hypotheses present two ways of governing the country: governing the country by virtue and governing the country according to law. Facts have proved that there are serious problems in the simple rule of virtue or the rule of law. In the Ming Dynasty, Wang Yangming (1472–1529) put forward the hypothesis that human nature is the “We originally had no consciousness or feeling about something or person.”, thus proposing a strategy of “harmony of knowledge and action.” But on the whole, Wang Yangming’s philosophy is still biased towards Confucianism, emphasizing the good thoughts that inspire humanity. These three typical assumptions may also be the reason the rule of virtue is more common than the rule of law in the history of China.

Zhongyong (Golden Mean) Is the Key to Solve Managerial …

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The most common strategy to form and utilize the third party to solve contradiction is substitution. In most cases, contradiction is derived from the resource (tangible or intangible) constraints. The essence of decision making is tradeoff. If there are no resource constraints, we can keep everything which there is no contradiction. Contradiction emerges when a decision has to be made whether or not to take something. However, there is an assumption for such contradiction, i.e. everyone in a stabilized system has to deal with the resource constraints. Therefore, if resource constraints do exist, we could solve contradiction by dealing with the assumption of “a stabilized system”. So called substitution is to exchange space for time, intangible asset for tangible asset. During the World War II, China’s victory is based on drawn-out war strategy by substituting time by space. In diplomatic relationship, China often adopted a strategy to gain support by other countries by its larget market. It is a common strategy by Chinese companies to win market share by means of flexible profit arrangement. This is exactly the principle of “To adhere is to withdraw; to withdraw is to adhere. Yang does not leave Yin; Yin does not leave Yang. Yin and Yang should be mutually complemented. After you are able to mutually complement Yin and Yang, then you are able to comprehend the jing” as expressed in Taiji Taiji boxing theory. According to Mr. Pang Pu, a famous contemporary Chinese philosopher, there are four ways to solve the two contradictory relationships between A and B by means of Zhongyong.21 The first type: “A and then B”, that is, B is used to supplement A. The second type: “A, but not A”, that is, preventing A to be excessive on surface, but holding A by B in essence. It is the opposite of “A and then B”. The third type: “A and B”, that is, both A and B are equally included. It is an extension of “A and then B”. The fourth type: “not A, not B”, that is, beyond A, B and above. It is the opposite of “A and B”.

Mr. Pang Pu sees contradictions from the perspective of Confucian dialectics, that is, the doctrine of the Zhongyong. He defines it as the dialectic of “dividing into three.” Either way, it is a way to avoid intensifying contradictions. It is a way to keep face for both sides A and B and leave room for maneuvre. The maintenance of face in the Chinese society is largely due to this logic. Only in the case of extreme conflicts will the Chinese adopt the fifth method, i.e. A instead of B. This is another manifestation of the law of excluded middle. This has created the wrong expression that Chinese culture is unpredictable and logically contradictory. The effectiveness of Zhongyong oriented solution depends on whether contradictions could be solved during Taiji stage. Missing such timing will lead to extreme measures, which is detrimental to management effectiveness. Similarly, Zhongyong aims to avoid stereotypes, which is linear and unidimensional. With stereotypes comes to lack of flexible approach by spatial and temporal transformation, or transformation between tangible and intangible resources, which are only available in a higher dimension. Such approach does not consider the 21 Pang

Pu: “Dividing One into Three”, Beijing: Xinhua Publishing House, 2004.

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Fig. 1.5 Using three basic criteria of Zhongyong

dynamic process of Zhongyong. In a comparatively static context or short period of time, Zhongyong is extreme for Zhongyong does not aim for stability or fairness in certain aspects. Rather, Zhongyong aims for the overall fairness for everyone, and efficiency in certain aspects (Fig. 1.5). It is not feasible to go for Zhongyong for sake of Zhongyong itself. According to the Chinese dialectics way of thinking embedded in the Taiji Logic, contradiction is the source of dealing with conflicts whereas harmonizing is the outcome of dealing with contradictions. This is the reason Chinese dialectics was considered as “harmonizing dialectics”.22 The strategy of using the third party in conflicts resolution truly reflects the Chinese management wisdom (Fig. 1.6). Three keywords of Taiji Logic are: Yin Yang, Taiji and Zhong Yong. In summary, in the context of Taiji Logic, the harmony of an entity is relative. Any harmony entity consists of two conflicts that are cooperative and competitive, i.e. Yin and Yang. The key of dealing with these contradictions is the tradeoff between benefit and loss from the evolution of these conflicts. The best timing of dealing with these conflicts is the Taiji phase, i.e. when Yin and Yang have not diverged during the evolution process. Indeed, Zhong Yong presents an effective strategy to deal with these conflicts via the interaction between Yin and Yang, or relying on the third party.

22 Zhang

Chuyu: “Various visions on Yi Ching and Dialectics”, Hangzhou: Zhejiang University Press, 2008.

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Fig. 1.6 Three supporting points of Taiji logic

Reinhard Wagner, German, Chairman of the IPMA Council and Past President of IPMA

During many visits to China and Chinese companies I observed that management most of the time just followed the “main stream” education at management schools in North America and the United Kingdom—because it was fashionable to have a degree from one of these management schools. Fortunately, during a couple of years several Chinese Management Schools and their Professors are in the process of re-discovering Chinese Philosophy and Wisdom, including but not limited to Confucianism. Management increasingly draws from the distinct principles and practices of Chinese Philosophers and tries to find its own, “the Chinese way of managing”. However, for Westerners it´s not easy to understand this Chinese way of thinking

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and acting. During the present period of political and economic tensions between China and the USA, it is crucial to better understand and adapt. What is a good metaphor for this trade dispute is the American Boxer and the Taiji Master. The first one, pumped with energy and focused on an isolated target is getting straight to the center of the fight. The other, the master is more focused on his own, inner strength. Taking into account interrelated context factors and utilizing the energy of the opponent he is clever enough to counter the attacks and gain advantages. It will be interesting to experience the end of this fight in real life… The book’s value in my view is not the comparison between Western and Chinese philosophical principles and practices, as there is not ONE Western philosophy (I am sure there is also no unified Chinese philosophy). The German Philosophers mentioned in the book are unique in constructing their views of the world, however they are difficult to trace in management literature of the West, as this is mainly derived from simple (Prussian) military tactics or a simplifying engineering perspective. Only in the past couple of years in project management research and agile practice we have had a look into their roots and find philosophical sources of what we do—at least we try to interpret it that way. This is why the book is extraordinary as it deep-dives into the Chinese way of thinking and acting seen through the lenses of documented ancient narratives. Maybe this forms an innovative, contemporary way of managing (projects). The main emphasis in the first chapter is on dealing with management contradictions. Educated in the Western (German) system, my question is: where is the point? We are educated to be self-confident and tackle problems immediately; and there is always a solution (“yes we can”)! However, there is the VUCA-world. Right. Sometimes it’s not that easy to solve the problem. Or a new problem emerges after solving the first one. And so on and so forth. The West needs to re-discover it’s own roots, philosophies and ways of thinking to cope with the complex realities of “real life”. There is a wealth of schools, narratives and philosophers to draw from, in all cultures, regions and countries. Western Management Schools should certainly learn more about the Taiji logic, the dialectics of dealing with complex situations in real world and especially the context of social interactions, which is at the heart of every project.

Chapter 2

Project Value Is Always Associated with Contradictions

Contradiction is the driving force of developments. Contradiction theory, Mao Zedong

Society is full of contradictions. On the one hand, contradictions may facilitate the development of society. On the other hand, they may lead to turbulence and decay of the society. The major role of management personnel is to identify and solve various contradictions in day-to-day activities. The value of management personnel will be largely compromised if those contradictions can not be identified and solved. Indeed, a project is needed because new contradictions can not be dealt with by the existing operation mode. There are a large amount of contradictions during the project decision making process between shareholders and managers, project governors and project managers in PPP projects. It is a key task of project governance to effectively deal with contradictions by identifying them and understand the driving forces.

Contradictions in PPP Projects Most major projects involve collaboration between the public and private sectors. It is very rare that the government is not involved in a large-scale project. The relationship between the government and the private sector is naturally the unity of opposites. Two parties depend on each other but with different perspectives. It is imperative for both the government and the private sector to understand and deal with these contradictions. Otherwise both parties will suffer from losses, also bring instability to the society. To maintain its status, every single government has to promote economic development. The private sector is the most efficient in economic development. Therefore, the government cannot survive without enterprises. The impacts of government policies and regulations on an enterprise may not be significant when it is small. However, when growing into a certain level (e.g. certain number of employees, international

© China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_2

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market, etc.), the enterprise will rely more on the government. All large scale companies are public enterprises to a certain degree. Their operation status, management capacity and product quality have implications on the public. Therefore, large scale enterprises should bear more social responsibilities. It is not a straight call whether a market economy is better than a planned economy. Similarly, it is hard to differentiate the importance of fairness and efficiency. The relationship between fairness and efficiency is the unity of opposites. It is an ideology to have perfect fairness and efficiency. In reality, the dominance between fairness and efficiency depends on the major contradictions in a country, region or even enterprise. It is not appropriate to simply apply approaches which are useful in one country to another. There is not only dependency but also contradictions between government and enterprises. In general, government has to maintain the fairness in society. However, for enterprises, it is not possible to achieve adequate profit without monopoly and efficiency. One of fundamental functions of government is to fill the gap of the market economy. By contrast, enterprises aim for identifying the flaw of regulations for their own benefits. Government motivates innovation to benefit society; enterprises motivate innovation to increase the competitiveness and hence increase profitability. It is not appropriate for governments to expect that profit-driven enterprises look after the public’s benefits through ethical behavior. Government would be irresponsible if it is fully relying on the market mechanism. Meanwhile, an enterprise should not simply rely on the preferable government policies while overlooking boundaries between itself and government or not-for-profit organizations. Enterprises are irresponsible if simply dreaming about fairness and not achieving partially monopoly. In China, the typical case of the unity opposites is that government encourages social capital to be introduced into infrastructure developments, i.e. Public-Private Partnership (PPP).1 As a collaborative development and operation approach, PPP encourages the participation of the private sector into the infrastructure delivery. PPP was introduced into China in the 1980s. Since then, the take-up of PPP is rather slow. However, the debt pressure of local government is becoming severe. In 2014, the State Council released the Opinions on Strengthening the Administration of Local Government Debts, which facilitated the PPP development. The Ministry of Finance and NDRC had released their own guidelines for PPP projects. Similarly, PPP project databases were established. As a consequence, PPP projects gained rapid development since 2015. However, PPP projects did not achieve expected performance despite the supporting policies and guidelines from governments. As a critical approach to engaging private investment, PPP did not perform very well. This has drawn attention from the central government. China Public Private Partnership Center (CPPPC) is the research arm of the Ministry of Finance. According to statistics of CPPPC, the number of PPP projects approved by various levels of governments reached 8043 in China, including a total investment of over 9310 billion RMB. However, only 22% of these projects are finally implemented. 1 Strictly speaking, PPP is a cooperative approach. Such cooperation is temporary as well. However,

it is not based on projects during most of the time periods. Therefore, it cannot be simply called PPP projects. This chapter does not make a distinction for the sake of convenience, which will be explained later.

Contradictions in PPP Projects

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On 30th May 2016, MoF and NDRC jointly released the Notice on Jointly Improving PPP projects. A total of seven measures were introduced to facilitate PPP developments. Similarly, the business value derived from the ongoing operation is paid attention in PPP project. Meanwhile, the private sector is encouraged to adopt innovative management models, improve the operation efficiency and enhance the project benefits.

The contradictions between the government and enterprises (especially the private firms in the Chinese context) could explain why PPP projects did not perform as expected. The typical contradictions between the government and enterprises in PPP projects are shown in Fig. 2.1. The first type of contradictions: Government expects relief on the finance pressure, whereas enterprises expect high profits from concessions.

Fig. 2.1 Contradictions between government and enterprises in PPP projects

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One of the reasons various levels of Chinese governments encourage PPP projects is because of high debt ratio of local governments.2 Due to different perspectives, two parties do not share the same expectations and approaches in PPP projects. Government’s understanding of financial statement is: Shareholder’s equity = Asset − Liabilities By contrast, enterprise’s understanding of financial statement is: Asset = Shareholder’s equity + Liabilities In other words, governments expect timely cash-in in order to meet the requirements of financial revenue. By contrast, enterprises expect the increase of the total volume of assets rather than more taxes. The second type of contradictions: the performance of government officials is in comparatively short term, whereas the return of investment for enterprises will normally cover multiple terms of governments and officials. The vast majority of government officials will have moved to different positions in 10 years. For those with better performance, the change of position or promotion will be even more frequent in China. Government officials are motivated to facilitate the implementation of PPP projects so that they are more likely to be promoted. On the other hand, the concession period of PPP projects is generally more than 15 years. The successors are not motivated to support PPP projects if they cannot gain benefit, or even have to deal with various issues during the implementation and operation stages. Due to changes with aspects such as new technology, a number of corresponding variations could occur within the project duration (15 years or longer). These variations could be treated as events of force majeure by governments. As a consequence, it is difficult for enterprises to obtain the benefits as defined in the initial contract. State owned enterprises are not sensitive to these variations as the government is their owner. The worst situation is that senior executives will bear all responsibilities whereas the enterprise itself will be protected by the government. By contrast, private firms may bankrupt in the same situation. The fate of managers and the enterprise is the same for private firms whereas it is separated for state owned companies. Private firms might be reluctant to participate into PPP projects if such contradictions are not solved. As a consequence, Public-Private Partnership becomes a Public-Public Partnership. The third contradictions: government focuses on the contribution of PPP projects to society whereas profit is the main concern for enterprises. 2 The

China National Balance Sheet 2015 (Beijing: China Social Sciences Press, 2015), which was developed by Li Yang, Chinese Academy of Social Sciences. According to statistics, the full-caliber local government debt ratio was 30.6% and the debt ratio was 112.8% at the end of 2012. The increase in local government debt balance is much higher than that of local government GDP and comprehensive financial resources since 2012. Therefore, it can be inferred that the local government’s debt ratio is much higher than 30.6% in 2015, and the debt ratio is much higher than 112.8%. At the end of 2015, the Standing Committee of the National People’s Congress reviewed the State Council’s report on regulating local government’s debt management. Review results showed that debt ratios of more than 100 municipalities and more than 400 county-levels have exceeded 100%.

Contradictions in PPP Projects

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In general, PPP projects are related to daily life of society, which has a certain level of monopoly in the region or market. On the one hand, monopoly is associated with high profit, which attracts the investment from private enterprises. On the other hand, monopoly means that the enterprise may not share the same view with the public. In the event of conflicts on benefits and safety, the major contradiction governments have to deal with is shifting from financial revenue to public concern. It is a common approach to sacrifice benefits of enterprises in such circumstance. This contradiction has to be foreseen and then dealt with during the decision making, execution and operation processes. Otherwise, the performance of PPP projects will suffer. State Council could rely on supervision to force the officials of local governments to fulfill the promise to the private investors. However, if these contradictions were not solved during Taiji stage, frequent changes could occur to original policies despite under the supervision of upper level government (Two Forms stage). As a consequence, the private sector may experience unfairness in the following ten years or even longer. It has been a rule of survival in history that the private companies should not go against the government. Such rule is still worth consideration by private firms in the 21st century.

Contradictions in the Project Decision-Making Process of Enterprises Contradictions exist between shareholders and business operators in terms of perspectives, interest and sense of security. As a result, there are a number of issues during the project initiation process, especially during the decision making of major investment projects. There are mainly three aspects of these contradictions (Fig. 2.2). First, there are different views on whether the contribution of project value comes from labor or capital. The judgment criteria of the values vary between shareholders and managers of the enterprise. In Chinese, there is an old saying that “Fortune is created by labor”. However, labor is simply one of elements of creating fortune, and in many cases it is not the most important one. Shareholders prefer fortune created by capital whereas managers prefer fortune created by labor (especially intelligent efforts made by senior executives). Common contradictions between shareholders and managers include: “who owns the glory for the success of the enterprise”, “who should be blamed for the enterprise failure”. When the contradiction reaches a certain level, minor shareholders may leave the company whereas major shareholders may vote for major changes to the enterprise. Meanwhile, managers may use two approaches in dealing with shareholders, i.e. taking advantage of social media to influence major stakeholders or partnering with a few shareholders. However, managers will suffer if these two approaches are used well.

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Fig. 2.2 Common contradictions between shareholders and operators of enterprises

A project needs not only the judgment of decision-makers based on knowledge, information and intuition; but also the resources support such as funding, human resources and technologies. In a society, differences exist between high-income people and rich people. Despite its high income, this class relies on the value-added labor from themselves. No matter if they are knowledge workers or manual labor, there is no income if they are not working. Business operators are in this class. They have to collect project information, make judgments on the project feasibility, manage and control the project risks, and deliver project outcomes. For rich people, they mainly provide funds, which is separated from their intelligence and working time. They can even earn project profit during the holidays. It sounds unfair but the allocation of benefits is according to the level of importance to the project rather than the fairness. When funding becomes the indispensable element of project success, it will decide the allocation of project benefits. It is unfair too that most efforts are made in the project initiation to fight for funds, whereas the critical role of funding is forgotten when the project generates benefits. It is a significant challenge to measure the contribution of funding and labor to the project. Second, during the decision-making process, the criterion of project success is the short-term benefits or long-term benefits. Some people prefer to use enterprise owner to replace shareholders. In this book, these two concepts are separated. Enterprise owners own not only the property and share of the enterprise, but also the sense of belonging. For enterprise owners, the enterprise is a lively entity where the shares form the integral part of the enterprise. By contrast, shareholders are the holder of shares of the enterprise. They share the

Contradictions in the Project Decision-Making Process ...

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enterprise value via their amount of shares as well as the transaction of shares. In China, “stock adventure” describes the concept very well. The essence is not holding shares, or the performance of the enterprise, but the adventure of stock (trading stocks). For shareholders, shares are separated from the enterprise. As employees, business operators undoubtedly expect appropriate economic return during their term of employment. In addition, minor shareholders consider shares as a commodity without a fixed price. In some companies, even some major shareholders overlook the long-term benefits of the company, expecting short-term profits from transactions in the share market. Such natural expectation and behavior are entirely different from the true enterprise owners. In general, performance indicators are set for enterprise management teams. Their salary, even the position, depends on their performance. It is not realistic to expect professional managers to consider the long-term benefits of the enterprise. In fact, even enterprise owners may change their original vision according to the fluctuation of the share price. They are under enormous pressure due to the potential short-term profit from cash-in of shares as well as minor shareholders. During the project decision-making process, it is natural for professional managers to pursue short-term benefits from project deliveries. This is also the case for those shareholders that wish to achieve cash-in from the transactions of shares in a short period of time. The short-term economic benefit is the critical criterion of their decision-making. Meanwhile, the business environment of the enterprise experiences continuous changes. It is nearly impossible for shareholders to forecast the future. Sometimes they have to accumulate experiences through a series of successful shortterm projects. Indeed, it presents a significant challenge for enterprise owners and managers to maintain the fine balance between short-term nature of projects and long-term vision of enterprise during major financial investment. Third, the role of project governance, i.e. the authority of the Principal-agent Relationship. In general, managers are those who have been employed by the enterprise owner, responsible for the operation of enterprise. Business operators are the senior management of the enterprise. A business operator is somewhat similar to the housekeeper of the enterprise. They are the agents of the business owners to look after the enterprise. Therefore, the trust between the business owner and the operator is always an important agenda of corporate governance research. Compared to shareholders, business operators have more sense of belonging to the enterprise due to their efforts in daily management activities. Similarly, business operators are more familiar with the external environment and internal situation. However, from a legal perspective, business operators do not have sufficient authority on utilizing enterprise assets because they do not hold the shares. On the other hand, the boundary between business owners and managers will blur if business operators hold the company shares. Even in some cases business operators do not hold shares but serve as chairman because of their influence and initial trust from shareholders, the benefits of shareholders (especially minor shareholders) may be compromised if the business operator becomes arrogant. There are cognitive errors due to inherent contradictions between shareholders and business operators. For instance, business operators hope that their own charm,

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talent and character can override the role of shares in the enterprise decision-making process. It is unrealistic for business operators to expect full freedom of decisionmaking delegated by shareholders if they do not hold any shares. Similarly, business operators should not take for granted that security of their career will be guaranteed. Business operators may misinterpre their roles due to a lack of professional ethics or awareness. And the mistrust from shareholders for the business operator level can cause them a sense of a lack of security to their career of benefits. Such mistrust may result in a vicious circle which may be harmful to not only the enterprise itself but also to the national industrial development. A long-serving housekeeper may be misinterpreted as the owner by outsiders. Similarly, sometimes housekeepers may even think they are actually owners. This contradiction will be detrimental to the trust and cooperation between business owners and operators. Meanwhile, the sustainable development of the enterprise can be compromised. It is a common practice that business operators advocate for full delegation by business owners. However, the reverse delegation is a common phenomenon, i.e. business operators return their own authority back to business owners so that everything will be reported. This is because business operators do not want to bear the risks and responsibilities. Under such circumstances, the time which business operators spend on shareholders and external stakeholders will not be sufficient. Meanwhile, shareholders may show dissatisfaction with business operators due to perceived fewer efforts. In Chinese Taiji logic, interpersonal relationship is a crucial parameter of decisionmaking. Due to a large amount of direct efforts (or be shown more frequently in the public), business operators could be regarded as heroes by ordinary shareholders. By contrast, it is not unusual that the business owner (major shareholder) is overlooked. It is imperative to clearly define the boundary of roles and responsibilities between business owners and operators. Otherwise it is likely business owners walk on stage to declare the authority and ownership. The trigger of such contradiction often exists in the decision making of major investment projects. Vanke is the benchmark for Chinese real estate companies. The battle for Vanke’s control lasted for a year which attracted wide attention. On July 10, 2015, Baoneng intervened the first time, with a shareholding ratio of 5%. On July 24, 2015, Baoneng intervened the second time, with a shareholding ratio of 10%. On August 31, 2015, Wang Shi responded the first time, alluding to the fact that Baoneng was a “barbarian at the door.” At the Vanke Extraordinary General Meeting, Wang Shi, Chairman of the Board of Directors of Vanke, clearly stated said that Vanke has always been a company with scattered equity. Vanke’s major shareholder is a small and medium-sized shareholder. Vanke has no absolute control and actual controller, but has relative control. No matter who is the largest shareholder, management still has a voice. On November 27, 2015, Baoneng held a total of 15.254% of Vanke’s equity, surpassing China Resources (15.23%), which was previously disclosed by Vanke as the largest shareholder. On December 17, 2015, Wang Shi, Chairman of the Board of Directors of Vanke, bluntly stated in the internal speech of Vanke’s Beijing conference room that Baoneng was not worthy of being a major shareholder of Vanke, and would fight for Vanke’s brand and credit. Wang Shi stated: “The reason for not welcoming is very simple: your credit is not enough.”

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On January 15, 2016, Vanke’s repurchased shares were canceled. On January 30, 2016, Wang Shi remarked that private enterprises are not welcomed as the largest shareholder of Vanke. On the afternoon of June 27, 2016, the Vanke Shareholders’ Meeting was once in a state of confusion caused by questions. Some supported Wang Shi whereas others did not. Shareholders asked when Wang Shi planned to let go. Wang Shi replied: “My success is that no one needs me any more. This is a success. Now, I am not very successful.” The implication is that he still did not want to go now. —https://www.touzi.com/news/021084086-75034.html It is reported that the Shenzhen Metro Group and the China Evergrande Group had a positive and friendly negotiation in the early stage. On the afternoon of the 9th, Shenzhen Metro Group Co., Ltd. and the subsidiary of Evergrande signed the transfer of Vanke. According to the agreement, Shenzhen Metro Group accepted 1553210974 shares of Vanke A shares held by subsidiaries of Evergrande in cash transactions, accounting for 14.07% of Vanke’s total share capital. Through the transfer of shares, Shenzhen Metro Group held 29.38% of the total share of Vanke, becoming an important shareholder of Vanke. —http://money.163.com/17/0609/23/CMHCDJAL002580S6.html On June 20, 2017, Wang Shi stated in his circle of friends: “Today, Vanke has announced a new list of candidates for the board of directors. I have decided not to be nominated as a director of Vanke.” —http://www.xinhuanet.com/fortune/2017-06/22/c_129638169.htm

During the decision-making of major investment projects, major shareholders will consider the variations to authority and benefits associated with the changes to the ownership structure. By contrast, business operators will consider current profits from these projects. Minor shareholders will consider the implications to the share price. Employees will consider their career and sense of security to their jobs. These contradictions are so complex that implications are very severe to the relationship between business owners and business operators. It is crucial to define the major contradiction in each project stage and develop solutions acceptable to all parties in the Taiji stage. Otherwise both business owners and operators will suffer, not to mention minor shareholders.

Contradictions in Project Governance and Project Management The boundary between project governance and project management is a blur, similar to that between corporate governance and management. Consequences of the blur boundary between corporate governance and management include: the chairman overrides the general manager or vice versa. Sometimes the boundary is so vague that one person will serve as both chairman and general manager. The consequence of a blur boundary between project governance and project management is comparatively simpler but similarly severe: business operators (including management) hold all authority but project managers have to bear all responsibilities. The contradiction between project governance and project management is somewhat similar to both sides of a coin. Project manager is responsible for achieving

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Fig. 2.3 Contradictions between project governance and project management

project performance such as cost and efficiency. Project governor is responsible for project value. Project managers place more focus on the uniqueness of a project in a bid to be allocated unique power and authority. The project governor pays more attention to the controllability of the project so that the management guidelines of the enterprise will be complied with. Project managers are responsible for the one-off project and their responsibilities terminate along with the end of the project. Project governors expect that experience learned from the project could be useful for other projects. Their responsibilities maintain along with the existence of the enterprise. These contradictions between project governance and project management are shown in Fig. 2.3. First contradiction: project governance is responsible for project benefits whereas project management is responsible for the efficiency of project deliverables. Accountability of project manager has drawn wide attention. However, in fact the authority and resources owned by project managers are very limited. As a consequence, they are only able to bear a small amount of responsibility. A lot of critical success (or failure) factors to the project to a large extent are not under the control of project managers. There are often inspirational quotes in books, keynote presentations and leaders’ speeches. These include: “the project manager is the person who is most willing to become general manager”, “let the personnel in the frontline take the lead”, “project managers will play a crucial role in the 21st century”. However, in reality, project management’s authority is very limited unless they also serve other important administrative roles. The project manager holds the accountability for the project. In the case

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of project failure, project managers are often blamed and have to take responsibility. As a consequence, project managers becomes accountable for project failure. For enterprises, it is more important and fundamental to “do the right projects” than “to do the projects right”. The project manager should not bear the responsibility to judge whether or not the right projects were selected. Rather, this responsibility falls on project governance. If project managers are forced to take responsibility associated with the enterprise, they often pursue partial project efficiency whereas the overall benefits of the enterprise may be compromised. Enterprise senior management should hold responsibility of selecting projects to be executed. Project managers’ responsibility is to ensure project success. However, in some cases enterprise senior management may act as project manager as well. Project managers do not have authority to determine the right projects. As indicated in the title, the project manager’s post only exists when there are projects. Temporary is one of the characteristics of a project. In particular, the post of a project manager is temporary. It is a fundamental rule in China that project managers will not be delegated until a project is funded. In the fast-changing era, an enterprise has to develop capabilities to complete a project efficiently. The level of such efficiency will determine the level of profitability for the enterprise, and in return the success of the enterprise. However, like the board of directors have to determine the ways to achieve profits rather than relying on enterprise operators, enterprise operator should not simply rely on project managers of completing all project tasks. Project success requires not only competent project managers for the project management, but also competent enterprise senior management for project governance. To a certain degree, the performance of project governance determines the ways of achieving profits. On the contrary, project managers simply have to achieve such goals at a high level of efficiency. The second type of contradictions: project governance is responsible for the management of the environment of projects, whereas the project management is responsible for the process of completing all project tasks. The main tasks of project governance include: setting project goals, providing all resources necessary for project completion, determining ways to achieve project goals as well as measures to monitor and control project performance. In essence, project governance focuses on providing the goals, resources and institutional environment of project management. By contrast, project management is dealing more with how to achieve project goals by using resources effectively in such an institutional environment. The project manager only takes the responsibility of achieving project goals. It is difficult for project managers to be responsible for the aim of the project. Their main responsibilities are to ensure doing the projects right, rather than doing the right projects. Then, who should be responsible for doing the right projects? Who should determine the priority of project resources? In fact, all these are responsibilities of the project governance. It is not unusual that contradictions exist between temporary project managers and stable line managers in terms of resources. Project managers want as much as possible that the right resources are assigned to the project. On the contrary, line managers want to minimize the resources allocated to the project. Therefore, project manager

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cannot determine the project decision-making, even during the development of the project plan. Project managers have to negotiate with line manager, gain support from the senior management and other related departments. Similarly, not the full amount of the contract value will be allocated to the project manager for use. In general, a large amount of gross profits will be deducted. Similarly, it is not unusual that limited resources (human resources, equipment) are allocated to the project as all resources will take a fair amount of profit. This is particularly the case when multiple projects are undertaken by the enterprise. In such circumstances, the enterprise will attempt the dynamic allocation of resources. This presents even more challenges for the project to take dedicated resources. Due to the temporary nature of a project, project managers normally will not be supported if they have any conflicts with line managers. In addition, project managers do not have the authority to sign contracts with suppliers and subcontractors. Similarly, they cannot allocate or bring in benefits to these parties. The only thing a project manager can do is to demand that suppliers and subcontractors fulfill their contracts. Therefore, the capability of project manager to use external resources is limited. The third type of contradictions: project governance is responsible for the institutional relationship amongst all project stakeholders, whereas project management is responsible for the management approach of project activities. For enterprises, project governance consists of two activities: (1) to identify, establish and guarantee the governance relationship with stakeholders internal and external to the enterprise; (2) to identify, establish and guarantee the governance relationship amongst all departments and that between each department and the project. Due to the severe changes to the business environment, it is a challenge for every single enterprise to fulfill customized and unique demands so that it can survive and sustain development. It has become a common trend that everything is undertaken as a project. To achieve both efficiency and uniqueness (innovation), each enterprise has to develop a value network with others. In this network, each enterprise will focus on one particular aspect which it specializes in. It will be rare that a project will be undertaken by a single enterprise. On the contrary, it has been increasingly popular that multiple enterprises cooperate to complete project tasks. In such circumstance, each individual enterprise acts as a functional department to fulfill one proportion of the project. However, it is very common that each enterprise undertakes multiple projects at the same time. It is the criterion of decision-making to pursue the maximization of its own benefits. This results in the inconsistency of priority assigned to the project by different enterprises. As a consequence, it is more likely that projects will suffer from delay or even fail. It is comparatively easier within one enterprise that its departments can be coordinated. When necessary, the senior management can reinforce the allocation of resources for the completion of a particular project. However, it is difficult to coordinate multiple enterprises. It goes beyond the scope of traditional research on project management to deal with such issues. This is due to programme and portfolio management from the perspective of a single enterprise.

It is a common misperception that project management is very basic and mainly involves the execution. Even worse, the management approach employed is that everything will rely on the project manager. In fact, under the circumstances of project governance, at least 50% of the issue falls in the responsibility of project operators (including functional departments). It is very common that general managers spend a

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Fig. 2.4 The boundary between project management and project governance

large amount of time on dealing with external stakeholders as well as coordination of internal stakeholders. The improvement of effectiveness in these efforts will create a positive management environment for the enterprise’s projects. The common issue in management is the poor definition of roles. This is also a result of blur boundary between project management and project governance. Without clear distinguishment of these two concepts, it is hard to justify the introduction of project governance despite the well-established project management. The difficulty to define the boundary between management and governance is due to management covers governance in broad sense, which governance can be understood as “the management of management”. One criterion of distinguishing these two concepts is the authority of project manager (Fig. 2.4). In theory, authority should be in proportion to the responsibilities. However, in reality, it is very common that project managers are forced to take all or at least most of responsibilities for project management. The project manager’s authority is very limited. Each enterprise will undertake multiple projects, which means it is impossible that all resources are allocated to one project manager. In general, resources required by the project are owned by functional departments. It is a functional manager or general manager with a stable post to be responsible for these resources. As a temporary post, project manager does not have such authority. This is particularly the case in the context of crossorganizational projects.3 In other words, the project manager can use but does not own the resources. It falls into the scope of project governance to determine how 3 The term “organization” used in this book can refer to both an enterprise and a department within an

enterprise. In this book, projects across the enterprise are also considered as an inter-organizational project.

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many resources are allocated to the project and fundamental rules. According to these rules, it falls into the scope of project management to use these resources effectively. It is not appropriate to assign to the project manager all responsibilities of development, especially in cross-organizational projects. Therefore, it is the authority of the enterprise and related organization rather than the project manager to define project goals and assessing if the project manager’s responsibilities are fulfilled. A “Native of Beijing in New York”4 is a popular Chinese movie. There is one dialogue in the movie: “if you like someone, send him or her to New York as it is a paradise. If you hate someone, send him or her to New York as it is a hell”. This is also applicable to project managers: “If you like someone, let him or her become a project manager due to the exceptional performance in the event of project success. If you hate someone, let him or her to become a project manager due to the responsibility for project failure”.

An effective project governance environment is a prerequisite for project managers to take accountability. Statistics show that the overall success rate of projects remains around 30%. Most significant factors, which are responsible for more than 60% of project failures include: mistakes in project decision making, inappropriate project goals, lack of support from top management, lack of support from functional departments. These issues are all related to project governance. If project management represents project productivity, project governance represents the production relationship within the project. If project management represents the internal driving factors of project success, project governance represents the external driving factors of project success. It is crucial to ensure the effectiveness of both project management and project governance. In 1911, in his book “The Principles of Scientific Management” Frederick Winslow Taylor called “as long as you have the right people, then everything can be safely handed over to him/her to do it” as an outdated view. Indeed, it is not appropriate anymore to rely solely on a project manager for project success. Old school of management is that people are the first priority while the system should take over in the new school of management. In a fastchanging social environment, it is more appropriate that project governance takes care of half of project related issues. As a consequence, it is more likely to achieve project success as well as project manager’s satisfaction.

Projects exist because of contradictions. Similarly, project’s values are presented when contradictions are solved. Taiji logic can be used to help us to forecast contradictions in project governance and to solve them in proper timing which is accepted by both parties. Taiji logic involves the consideration of the following issues: how to define major contradictions following Yin-Yang (law of unity of opposites), how to define the Taiji stage where main contradictions will be solved according to the revolution of contradictions, how to develop solutions according to a philosophy of Zhongyong (Golden Mean). Taiji stage is the intermediate process to link contradictions with their solutions. We can define the Taiji stage according to the trend of contradictions. Similarly, major contradictions can be identified by means of an antithetic approach according to the Taiji stage. The governance contradictions vary according to different stages 4 Photographed in 1993, it is a series of TV dramas in which Beijing people struggled in New York.

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of project governance. It is necessary to identify these contradictions and design effective solutions. In the following chapters of this book, a few critical aspects of project governance will be classified into a Taiji stage. Major contradictions and Zhongyong oriented solutions in these stages will be analyzed.

Pau Lian Staal-Ong, The Netherlands, Director NETLIPSE, Consultant AT Osborne, IPMA Global Awards Coordinator

This chapter contains three sections describing the contradictions between the government and private sector enterprises working together in the realization of large-scale infrastructure projects, especially in the form of Public-Private Partnerships (PPP). In addition, this chapter looks into contradictions in decision-making processes and contradictions in project governance and project management. The contradictions described at the beginning of this chapter highlight the differences in the interests of the organisations involved in a PPP contract in China. The government organization looking for financial relief and private sector organisations looking for profits, long term return on investment and manageable risks. These are similar to the contradictions experienced in the realization of large infrastructure projects in Europe, where government organisations are struggling to find better ways of cooperating with contractors. In 2006, the European Commission funded a two-year research project called NETLIPSE (Network for dissemination of best practices and lessons learned in the management and organisation of large infrastructure projects in Europe). During the execution of the research, a network of government organizations responsible for the funding and delivery of these projects was created. A unique public sector network, that continues to share their experiences and challenges even today. Similar to the government challenges described in this chapter, European governments are also searching for new ways to fund their transport ambitions. Ambitions that need realization in order to provide for the socio-economic development in the individual countries. And ambitions, that are greater than the current funds available. As a result, these governments have been looking for ways to share the financial

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burden as well as the risks involved in realizing these infrastructure projects. Current discussions within the NETLIPSE network, focus on tendering and contracting experiences, specifically those that ask for a more integrated collaboration form, such as a PPP. The Europe Union consists of 28 countries that each have their own ways of working and their own national laws and regulations. Nevertheless, the challenges experienced in the collaborative contracts are similar. Although some countries have more mature policies with respect to this contract form. The way these challenges are handled are different. And that is interesting to discuss in order to learn from each others’ experiences. The contradictions of European enterprises’ decision-making processes seem similar to the contradictions described in this chapter. In Europe, the shareholders and business operators also have different views on what defines business value, the definition of short-term and long-term benefits of a large infrastructure project and the role of project governance in the realization of the projects. And finally, the project governance and project management of a large infrastructure project are indeed important organizational aspects that need clarification at the start of the project in order to reach project success. One common denominator in the large infrastructure projects in Europe is that they often outlast governments. As a result, the definition of roles is a common theme that needs re-addressing when opportune. In all, the Chinese approach in creating project value by handling the contradictions involved in and around a large infrastructure project is similar to the way this value is created in European projects. Discussing and understanding these similarities and experiences will help to improve the project management. Not only in Chinese projects, but also in those large infrastructure projects in Europe. That is what the NETLIPSE network supports. Perhaps it is time to introduce the Taiji logic in one of our next Network Meetings.

Chapter 3

Project Opportunities Derived from the Interactions Between Internal and External Contradictions

Exteriorenvironment depends on the internal thinking. Impermanence

First step is always the hardest. There is a prerequisite for both project management and project governance: locating a worthwhile project. The first step should do the right things, which is followed by doing things right. The first priority of project governance is to identify project opportunities. It is a process to find something from nothing for the identification of project opportunities. It is not only an interaction between people’s desire and the environmental conditions, but also the most challenging and exciting part of project governance and project management. Opportunity is a comparatively subjective term. It presents chances to some people and means nothing or even a disaster for others. Opportunities derive from the compatibility between the demand of an individual or organization (internal contradictions) and demand from the external environment (external contradictions). Opportunities take place in appropriate timing. Therefore, the reliable and effective management process is required in order to identify and take advantage of opportunities.

Exploring Opportunities Is Driven by the Desire of Solving Internal Contradictions There is a Chinese speaking, i.e. opportunities are always left for those that are better prepared. In other words, the emergence of opportunities varies according to individuals. It is dangerous to simply adopt other’s approaches without consideration of both internal and external factors. Every enterprise is different in terms of internal factors, external factors and their dynamic relationships. As a result, it is not unusual that a project presents opportunities for one enterprise and risks for another.

© China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_3

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3 Project Opportunities Derived from the Interactions … “Belt and Road” is one of national strategies in China. This initiative involves a large number of countries. Most of them are developing countries with strong desire to improve infrastructure and economic system. A number of project opportunities exist due to various cooperation between China and these countries such as policy, infrastructure, trades, fund and cultural communication. In 2014, China’s offshore investment in non-financial sector reached 632.1 billion RMB (102.9 billion US), 14.1% increase from the previous year. These investments are made on 6128 offshore companies from 156 countries. The first half of 2015 witnessed a strong growth of export to “Belt and Road” related countries. The total value of bilateral trade between China and these countries reached 485.4 billion USD. Chinese international contractors have undertaken 1401 projects in more than 60 countries, with the total contract value of 37.5 billion USD. In particular, 137 projects have contract value of more than 50 million USD, with a total contract value of 30.9 billion USD. These mega projects are mainly from the following sectors: electricity engineering, telecommunication, housing, transportation, petroleum and chemical engineering. The turnover of these projects reached 29.7 billion USD, accounting for 44% of the total value of international contracting from Chinese contractors. This is 5.4% increase from the same period last year. With so many opportunities, some Chinese enterprises attempted to cut some shares of “Belt and Road” market without thorough consideration of various factors such as: understanding of the local economic, political and cultural characteristics, the capability to complete the project. They blindly bid projects with unreasonably low prices. The consequence of unhealthy competition is low profit or even loss. Some projects were even terminated. This is detrimental to the project and enterprise. In addition, the general reputation of Chinese enterprises will suffer. As a result, it is difficult for these companies to participate into “Belt and Road” initiative.

Opportunities derive from the process of identifying and solving contradictions. Indeed, contradictions are the driving force of development. For an individual organization, there are two types of contradictions: (1) internal contradictions, i.e. internal driving force of the organization, (2) external contradictions, i.e. external driving force of the organization. These contradictions are featured with various relationships of the unity of opposites. Indeed, the development of an organization is the consequence of joint efforts of both internal and external factors. However, the roles and impacts vary from internal factors to external factors. Internal factors are the foundation for the existence and development of the organization, which is the fundamental difference between this organization and others. External factors are the external conditions for the development of the organization. In some circumstances, external factors play important roles in the development of the organization. Sometime such roles are decisive. However, the impacts are through the internal factors. Opportunity emerges when internal factors are compatible with external factors (see Fig. 3.1). This is what Guanzi called “As far as I know, if a state is not in order, a righteous action it takes overseas will not be trusted by other states.”1 Case-oriented teaching always forms an integral part of MBA program. The essence of caseoriented teaching is to seek truth from facts, i.e. drawing scientific laws from actual cases which can be applied in other enterprises. However, it is not unusual that the case was not fully understood during the teaching process. There is a lack of critical causal relationship between the existing conditions and the outcomes associated with the enterprise. Such cases do not fulfill the requirements of facts. As a result, regular conclusions could not be achieved after the discussion of the case. There are some successful cases that are implied with internal logical 1 Guanzi:

Da Kuang. The Big Historical Document of the State of Qi.

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Fig. 3.1 Project opportunities from the matching of internal and external causes

relationships. If these cases are used as references, teaching staff and students could fall into trap of dogmatism. The success of an enterprise is not possible without the cooperation between internal and external factors. An enterprise will fail if there is an imbalance between internal and external factors due to changing environment. This is exactly the reason nobody can win all the time. It is imperative for all enterprises to understand this principle rather than simply learning the so-called success mode.

The survival and development of an enterprise depends on fulfilling customers’ requirements. This is because the profit does not derive from the internal operation of an enterprise. However, such common knowledge does not exist from the beginning. During the era with supply shortage, the supply-demand relationship exists. However, the operation activities of enterprises are not oriented to customers’ demands, not to mention the customized demands. In 1960–70s, it is not unusual that staff of state-owned shops did not give warm welcome to customers. This is because there is lack of supply of products during that period of time. Customers have to provide various coupons in order to make the purchase. Even with coupons, the customer is not guaranteed to get the product. The situation is entirely different now. In order to obtain the best reviews in online shops, sellers have to make every single effort. This is due to the fierce competition derived from abundant supply of products. In the past, customers had to spend some energy and time to make purchases. Nowadays, poor evaluation scores provided by customers could be detrimental to online shops with just one click. It becomes a common knowledge to fulfill customers’ demand only in the circumstances of buyer’s market. It seems that such common knowledge derives from the business concept of “customer is the god”. In fact, it is based on the fact that seller could not survive without doing this. In other words, it is not common knowledge but a necessary means to satisfy the customers. In monopolies, it is still relatively hard for customers to get things done.

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At least two individuals or parties (i.e. customer and supplier) are required to justify the project. The project serves as the bridge to link these two individuals or parties. In other words, project is the way to fulfill the demand-supply relationship between customer and supplier. Therefore, it is necessary to identify the project client, to understand the major contradiction between customer and suppliers, and to determine how to establish a project to solve this contradiction. In order to solve this contradiction, it is imperative to identify the customer of enterprise as well as their demands. In a social system, each individual or organization is not only a customer but also a supplier. An individual or organization has no value if it is unable to supply as well. Indeed, it is more effective to identify and select projects from supplier’s perspective rather than the customer’s perspective. The effective solution to solve the internal contradiction cannot be identified unless taking a look from outside. A leader should have not only capability to identify contradictions, but also leadership art to stimulate contradictions and convert contradictions to project opportunities. In other words, an outstanding leader should be capable of taking a big picture and motivate staff to make efforts. When the internal contradictions are not severe, leaders should be good at developing values well recognized by everyone. This helps to stimulate contradictions between dreams and reality. Internal contradictions should not be presented by people’s fear but the passion to pursue dreams. In general, internal contradictions are derived from the shortage of resources and opportunities. With abundant development and growth, there will be fewer contradictions related to resource allocation and opportunity competition. There is what Mr. Xiaoping Deng called “Development is the absolute principle”. An enterprise will not pay attention to the external changes or consider the changes to customers’ requirements when there are no internal contradictions or it is not the best timing to solve such contradictions. Similarly, the value of enterprise to external environment and customers is very low when contradictions are constant therefore did not present the best timing to deal with them. Enterprise will not seek opportunities from outside unless internal contradictions need to be solved. Therefore, project opportunities derive from not only internal contradictions and external contradictions of the enterprise, but also the compatibility of these two types of contradictions (Fig. 3.2). A bold dream is required to identify external opportunities. This principle is documented in Guanzi: Junkuang Dakuang: “In the second year after Duke Huan ascended the throne, he summoned Guan Zhong. When Guan Zhong arrived, the duke asked, “Can the altars of Land and Grain be made secure?” Guan Zhong replied, “If you become lord protector to the king, the altars will be secure. Otherwise, they will not.” The duke said, “I would not/dare attain to such greatness. Just secure the altars of Land and Grain and that is all.” Guan Zhong again made the request, but the duke said, “I can’t.” Guan Zhong then took leave of the duke, saying, “Your saving me from death was my fortune, but it was because I wished to make the altars of Land and Grain secure that I did not die for Jiu. If the altars are not made secure, I would not dare receive a salary in the Government if Qi after not having dies for you.” Then he walked away. As he reached the gate, the duke called him back and Guan Zhong returned. The duke, perspiring under the strain, said, “Since there is no help for it, I will strive to become king protector.” Guan Zhong bowed down twice, knocking his head on

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Fig. 3.2 The project is based on resolving enterprise contradictions the ground and arose saying, “Today you will become that lord. I am eager to receive your orders.” He crossed to stand in the spot reserved for the chief minister and then ordered the five official bureaus to carry on their affairs.”

Similarly, Romance of the Three Kingdoms2 documented a chat between Liu Bei and Zhuge Liang. Liu Bei showed his desire to revitalize Dynasty Han and cordially invite Zhuge Liang to assist. If Duke Huan and Liu Bei did not have desire for revitalization of the country, even talents such as Guanzi or Zhuge Liang will not be able to make contributions.

It is a key leadership competence to identify project opportunities. In addition, it is imperative to understand human nature so that leadership can be developed and made most of. Pursuing benefits and avoiding danger is human nature, instinct of human beings and driving force of identifying project opportunities. This is well recognized by ancient sages. For instance, Guanzi believed: “For the stage kings in ancient times, there has been no such precedent that one of them had gained a high reputation, established great achievements, become famous all over the world and been remembered by all the forthcoming generations but has not won over the people. for the fatuous kings in ancient times, there has been no such precedent that one of them had lost his state, endangered the territory, caused destruction to the 2 The

Three Kingdoms began in AD 220 when Wei Dynasty taking over Han Dynasty, and finished in AD 265 when Jin Dynasty taking over from the Wei Dynasty. However, the historians often used the outbreak of the Yellow Turban in AD 184 as the beginning of the Three Kingdoms, and the elimination of Wu Kingdom in AD 280 as the end. The Romance of the Three Kingdoms documents the battles between the three kingdoms of Wei, Sui and Wu, written by the novelist Luo Guanzhong. Among them, “The Longzhong” documents the conversation between Liu Bei (the founder of the Shu Kingdom) and Zhuge Liang (his later Prime Minister) for the first time they met in Longzhong. This conversation laid the foundation for Liu Bei’s development strategy of Shu Kingdom.

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ancestral temple and been wiped out but had won over the people. The best way to win over the people is to provide them with benefits. And the best way to provide benefits to them is to influence them with the right policies”.3 Similarly, Sima Qian stated: “Jostling and joyous, The whole world comes after profit; Racing and rioting, After profit the whole world goes!”.4 From a subjective perspective, all individuals, enterprises and organizations are pursuing their own benefits. However, it is imperative to recognize that the satisfaction of own demands normally depends on others’ supply. In addition, someone has to fulfill others’ demands before asking for returns. The contradictions between benefits are not only reflected in economics, but also in reputation, status, supply modes and supply timing, etc. Selfishness and Altruism seem to be opposites. However, it is possible to achieve win-win if different dimensions were applied, i.e. time or space, subjective or objective, tangible or intangible. In Chinese tradition, “Yi” was used to reflect the realm of Altruism. “Yi” refers to the social morality which is beneficial to the social development, i.e. benefiting others not on the cost of the public. By contrast, “Li” normally refers to self-benefits. “Yi” aims to solve external contradictions of the enterprise such as the nation and society whereas “Li” aims to solve internal contradictions. As Mencius said, “men must be decided on what they will not do, and then they are able to act with vigor in what they ought to do.”5 This reflects the business wisdom even better than “Fulfilling customers’ demands”. The integration of “Yi” and “Li” covers the compatibility of internal and external factors. As the internal driving force to identify opportunities, this complies with the law of human nature. We cannot survive without “Li” and cannot develop without “Yi”. There is a book Zero to One6 which was published in western countries. In fact, Laozi has evaluated this question more than 2000 years ago. He stated: “All things in the world are produced by being. And being is produced by non-being” and “Dao begets One (nothingness; or reason of being), One begets Two (Yin and Yang), Two begets Three (Heaven, Earth and Man; or Yin, Yang and breath qi), Three begets all things”. Such “Dao” is the natural law, social law and human nature law. When our attitude and behavior comply with laws, it is easier to identify opportunities, to secure more assistance from others, to obtain better external conditions; and vice versa.

According to Chinese culture, there are three characteristics of a good opportunity, i.e. favorable climate, geographical advantages and harmony of people. These are so-called “three Du” by Guanzi: “Three Du means to examine opportunities provided by Heaven from above, to examine favorable geographical conditions provided by Earth from below, and to examine the support of the people in the middle. These are the three Du.”7 According to Mencius, harmony of people is more important 3 Guanzi:

Wu Fu. The Five Supporting Principles. of the Grand Historian. 5 Chapter 8 Li Lou (II), Mencius, Most of the short chapters cover politics, history, education, and personal life. 6 Peter Thiel, Blake Masters. Zero to One: Notes on Startups,or How to Build the Future, Crown Business, 2014. 7 The Five Supporting Principles, Guanzi. 4 Records

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than the other two.8 Favorable climate can be regarded as the major trend of social development. Geographical advantages can be seen as the governmental policy for the enterprise. Harmony of people indicates the cooperation of all stakeholders to the enterprise. Indeed, it is important to consider both internal contradictions and external contradictions. In addition, the role of internal contradictions is more important. Our vision will be broadened when we have clearer objectives and are more eager to pursuit success. As a consequence, more opportunities will emerge because more external conditions are compatible with desired success criteria, resulted in the higher probability to achieve success.

Potential Opportunities of the Project Exist in the Evolution Trend of Contradictions The fundamental approach taken by Chinese people is to “Keep the general goal in sight while tackling daily tasks”. Even ordinary people often pay attention to national or international affairs despite their subsistence problem has not been solved. This is the common perspective Chinese people take. In China, surname is placed before the first name. For postal address, the city and province information is placed before the street number. This is entirely opposite to the western approach which is more self-oriented. In the fast-changing era, every individual and enterprise has to face an uncertain environment. As Mr. Ma Yun (Founder of Alibaba) stated, it is not unusual that we did not see opportunities in this era. When somebody took action, we may not see its value. We could not understand where their profit came from. When we understood that, it is too late. Indeed, we have to have bold vision so that we are able to identify more opportunities in bigger systems. Meanwhile, we will have more time to capture these opportunities (Fig. 3.3). This is very similar to driving cars. Higher speed, better vision the driver should have. Otherwise the driver will not have sufficient time to identify potential hazards and then take proper actions. Su Shi of the Song Dynasty put forward in the “Quan Shu: Offence and Defence”: “in ancient time, there are three ways to win the battle: normal approach, surprising approach, and ambush tactics. The battle outcome remains unknown if taking the normal approach. If taking the surprising approach, the success rate is 50%. However, it is most likely to succeed if taking ambush tactics. In the military context, it is a common approach to use ambush tactics to win the battle. To identify project opportunities, it is necessary for suppliers to understand customer’s demands as early as possible and be prepared. As a consequence, we can precisely understand opportunities and secure the project. This is the “ambush tactics” in project governance. It is well understood that bidding success is unlikely if the preparation of bidding documents was not commenced until the formal release of tender notice in media. Indeed, it is crucial to participate into defining client’s demands in early stages so that bidding is more likely to be successful.

8 Chapter

4 Gongsun Chou (II), Mencius.

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Fig. 3.3 The larger the search horizon, the more opportunities for discovering projects

Fig. 3.4 Identifying project opportunities requires to understand customer’s needs

The relationship between supplier and client is driven by transactions. We will not be able to precisely understand client’s demands and identify project opportunities until we broaden our vision to client’s customers. This is the essence of “ambush tactics” (Fig. 3.4).

Such way of thinking (Keep the general goal in sight while tackling daily tasks) is very effective in the fast-changing era. This is because the speed of change is lower along with the distance. With long-term vision, we have more time to adapt. “Shi” is very important to Chinese people. For instance, as stated in “Liu Tao”9 : “Those who are good at winning battles are not because they can fight in the sky or above the underground. Their successes and failures are all about whether they can create ‘Shi’. If they gain this ‘Shi’, they will succeed.” Similarly, it is stated 9 LiuTao:

Six Arts of War. The book has six volumes, a total of sixty. The contents of “LiuTao” are very extensive, and almost all of them are related to war and all aspects. The most exciting part is its strategic theory and tactics.

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in Arts of War that “The clever combatant looks to the effect of combined energy, and does not require too much from individuals. Hence his ability to pick out the right men and utilize combined energy.” In Romance of the Three Kingdoms, Zhuge Liang forecasted that three kingdoms will co-exist even before he accepted Liu Bei’s invitation. This is, in fact, an accurate judgment of the evolution of social contradiction in advance. Therefore, the focus of Romance of the Three Kingdoms is indeed the “Shi”, i.e. “Domains under heaven, tend to unite after a long period of division; and tend to divide after a long period of union.” Thus the highest form of generalship is to balk the enemy’s plans; the next best is to prevent the junction of the enemy’s forces; the next in order is to attack the enemy’s army in the field; and the worst policy of all is to besiege walled cities. The Art of War: Attack by Stratagem Lu Buwei met Yi Ren, the hostage of Qin State in Zhao State during his business trip to Handan. He told his father: “what is the profit of farming?” His father responded: “Ten times.” Then he asked: “what is the profit of jewrey business?” His father responded: “100 times.” Then he asked: “what is the profit of helping someone to become the national leader?”His father responded: “That is countless.” Then he stated: “We have tried very hard for farming though we are still poor. We should try to help someone to become the national leader.” Stratagems of the Warring States: Qin Strategy There are four major sources for the profit of an enterprise, i.e. politics, policies, business model and management (Fig. 3.5). Political profit has the highest profit ratio. It refers to economic benefit derived from satisfying a kind of political demand (of course it is likely to satisfy the demand of individual in power). In fact, it is a consequence of transactions between politics and economy. The economic base determines the superstructure. Everyone needs food, clothing and housing. All peasants’ revolts derived from people’s livelihood, which is indeed the foundation of a

Fig. 3.5 The sources of enterprise profit

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3 Project Opportunities Derived from the Interactions … regime. Government could not solve people’s livelihood issues without enterprises. Similarly, an enterprise will not sustain development without the understanding of politics. In broader sense, policy profit can be categorized as a kind of political profit but with more sources. In addition, the sources of policy profit could be more imposing. It is very common that political profit is perceived as the linkage between someone with power and others with money. By contrast, policy profit is perceived as the linkage between policies and the enterprise. Business model indicates where the enterprise sits in the business system. In other words, business model is the role of an enterprise in its business relationship with other enterprises, customers and suppliers. Business model determines the strategy however with no necessary relationship with the management. If an enterprise has to secure profit from improving the management performance, that indicates the cut-throat competition between enterprises (i.e. red sea). Very few entrepreneurs want their enterprise to fall into such category. They will seek the transformation of business model to politics and policy-oriented, i.e. blue sea. For an enterprise, its profits derive from the outside, i.e. linkage with the external world. Political profit is achieved from the linkage between the enterprise and politics (or between entrepreneur and politician). Policy profit is achieved from the linkage between enterprise and government. Business model profit is achieved from the linkage between the enterprise and other enterprises or individuals. All these sources are from outside of the enterprise. The management based on the linkage between the enterprise and employees will not produce profits. Rather, it can only reduce or increase the cost of profit. Romance of the Three Kingdoms spent a lot of space to describe the friendship between Liu Bei, Guan Yu and Zhang Fei; Zhuge Liang’s wisdom and Cao Cao’s crafty. However, the key message to be delivered is the opening sentence: “Domains under heaven, tend to unite after a long period of division; and tend to divide after a long period of union.” In other words, the trend of history remains no matter how many talents emerged during that period of time. This is also the reason Kingdom Shu was ruined first despite Zhuge Liang’s extreme talent. Identification of project opportunities relies on the understanding of macro environment (e.g. society, nation, technology and economy) and its development trend, rather than individual’s tips. As Guanzi stated: “Knowledge is good for formulating stratagems, but it is not as good as being timely”10 and “There are certain conditions that distinguish a lord protector or king. They are superior in terms of virtue and righteousness, wisdom and stratagems, armed forces and the conduct of warfare, knowledge of the terrain and maneuverability. Therefore they are able to rule the realm”. This principle is also reflected in Thirty-Six Stratagems.11 The investment decision of an enterprise is affected by two factors: internal conditions (its current position in the market, A) and external environment (its growth potential in the market, B). When both A and B are low, the enterprise should exit the market as soon as possible. If A is high and B is low, the enterprise should strengthen the cost management in order to achieve the maximized cash flow. When A is low and B is high, the enterprise should conduct some participative investment in order to sustain rapid development without exposure to investment risks. When both A and B are high, the enterprise should increase the investment in order to maintain its competitive advantage (Fig. 3.6).

10 Conversations

of the lord protector, Guanzi.

11 The “Thirty-Six Stratagems“ is a book of wisdom that is based on the excellent military thoughts

and rich experience during the ancient China. It captures the wisdom accumulated by the hardworking people of ancient China for thousands of years. It presents a concentrated analysis and interpretation of the laws of social wars, politics, and economic development. It summarizes the essences of Chinese wisdom. It is a classical book that is highly valued at all times and in all countries.

Potential Opportunities of the Project Exist in the Evolution …

45

Fig. 3.6 Investment strategies of enterprises

It is imperative to understand the dynamics between internal contradictions and external contradictions, especially whether the contradiction is close to the threshold. This will help to determine if it is the right time to initiate the project. To identify the Taiji stage for the project initiation, it is critical for the enterprise to establish an effective mechanism to collect and analyze intelligence. In Romance of the Three Kingdoms, Zhuge Liang always has something up his sleeve. However, what was overlooked is that Zhuge Liang has a strong intelligence team. Arts of War paid special attention to the intelligence. For instance, it was stated in “The Use Of Spies” that “Thus, what enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men, is foreknowledge. Now this foreknowledge cannot be elicited from spirits; it cannot be obtained inductively from experience, nor by any deductive calculation. Knowledge of the enemy’s dispositions can only be obtained from other men.” In the fast-changing era, it is difficult to forecast the future because of a lack of sufficient data and strong reliability. The most crucial barrier to understanding the trend is that “the more important thing, the more difficult to predict”. To deal with issue, it is not appropriate to use linear approach to forecast the future. Rather, we should base on a multidimensional system. This is one of crucial findings in mathematics: the issues generated in a system with n dimensions could be easily solved in n + 1th dimension. No profit is generated within the enterprise. Indeed, all profits derive from the linkage between the enterprise and external environment. Therefore, we have to broaden our vision from inside to outside of the enterprise. Furthermore, most of business opportunities come from developing countries. The preferable policies provide opportunities for enterprise’s development. It is important to broaden our vision to n + 1th dimensions such as economy, politics and society. This will help us to

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identify the clients, dynamics of their demands and the turning point of such dynamics. As such, we can determine the timing of project initiation as well as the project schedule.

Timing Is Important for Project Initiation As documented in Records of the Grand Historian, “If heaven gives you something and you refuse it, there will be condemnation.”12 Indeed, project opportunity depends on the overall trend of the revolution of both internal and external contradictions. However, trend does not equal to opportunity. Project should not be initiated until the best timing. If too early, project initiation will create a better environment for competitors, with Investments were made to create the market but without profits. If too late, project initiation will lose opportunities, which in turn reduces the returned benefits. This is so-called “Jie”, i.e. meaning of Taiji in Taiji logic. It indicates the best timing of resolving contradictions. Arts of War stated: “Therefore the good fighter will be terrible in his onset, and prompt in his decision. Energy may be likened to the bending of a crossbow; decision, to the releasing of a trigger.” It also emphasized the cooperation between “Shi” and “Jie”. For Chinese people, it is important to consider key factors (especially interpersonnel relationship) in a dynamic system. These key factors normally include profile of crucial individuals such as age, social network and group. The timing of project initiation depends on the recognition of contradictions from both suppliers and customers. Ideally the major contradictions between two parties can be solved via a project. As such, this project will gain strong support from both parties and hence be initiated successfully. As stated in Arts of War, “If we wish to fight, the enemy can be forced to an engagement even though he is sheltered behind a high rampart and a deep ditch. All we need do is attack some other place that he will be obliged to relieve. If we do not wish to fight, we can prevent the enemy from engaging us even though the lines of our encampment be merely traced out on the ground. All we need do is to throw something odd and unaccountable in his way.” It will be a failure if doing things in wrong timing, even those are right things. Similarly, it will be a failure doing wrong things in right timing. For instance, private cars emerged in 1990s and expired rapid growth by 2010 in China. During this period of time, it is very profitable to sell cars, as well as expanding the models and quantities of cars. However, since 2010, all Chinese mega-cities suffered from traffic congestion issues due to the large number of cars. As a result, governments introduced policies in order to control the number of private vehicles. This has slowed down the car sales. On the contrary, the volume of car repair experienced a rapid increase after the lagging effect (Fig. 3.7). Consequently, the focus of business operation should

12 “Volume

Records.

41, Yue Wang Goujian Family” and “Volume 92. Huaiyin Hou Lie Chuan”, Historical

Timing Is Important for Project Initiation

47

Fig. 3.7 Tendency of automobile sales and maintenance in the Chinese market

shift from car sales to repair and maintenance, car parking, car rental, etc. This is the reason new businesses emerged such as Badu, Youbo car parking and Didi taxi. Following factors should be taken into consideration when determining the timing. First, the change of leader. Leader plays a critical role in changes to policies and strategies. There is Chinese speaking “A new broom sweeps clean”. A new leader will undertake some new projects at the beginning of his/her term in order to establish the authority. If the new leader simply follows the original strategy, it is difficult to satisfy stakeholders’ expectation, to improve the performance, and to establish authority. Therefore, new leader will introduce new strategic directions or management strategies upon arrival. The leader will do the same thing before the retirement. This is because they will consider their welfare after the retirement and be prepared for the transformation of his/her roles. Some leaders even undertake some projects for short-term benefits just before the retirement. Or sometimes they made even higher strategic goals without thorough considering of reality. These are due to their pressure or desire for reputation after the retirement. Therefore, it helps us to identify project opportunities with a good understanding of leader’s psychological state upon arrival and during retiring. There is an interesting case. The manager of a large-scale Chinese state-owned company is responsible for developing a five-year plan. However, the draft was never approved by the company. This manager sought assistance from an expert. That expert asked a simple question: “How old is your chairman?” The manager suddenly understood why his draft was never approved. The chairman of this company was 57 years old, which is close to retirement. What he cares is what he can do after the retirement. In state-owned enterprises, the chairman is similar to government official. They have titles but are not shareholders. These chairmen will normally retire at 60 years old. However, some of them may join the Provincial People’s Congress or Provincial People’s Political Consultative Conference. Therefore, this manager

48

3 Project Opportunities Derived from the Interactions … amended the five-year plan to introduce projects with significant social impacts in the first year. This will be beneficial to the chairman to join the Provincial People’s Congress. The draft was approved very soon. Second, the occurrence of major events or the introduction of major policies (including amendments). Major events and amendments to major policies will result in a series of corresponding social activities and business activities. Recent years have witnessed major events in China such as Shanghai World Expo, Olympics Games and BRICS. These events have resulted in a number of infrastructure developments as well as a large number of project opportunities on cultural and tourism industries. Similarly, equipment development project opportunities derived from fast-speed train accident, disputes on Diaoyu Islands and South Sea. In addition, a lot of collaborative innovation projects emerged along with the National Science and Technology Conference and World Internet Conference. China is a developing country with annual per capita income of 8280 USD in 2016, ranking 72nd over the world. This is an effective approach in China as resources can be concentrated in strategic matters. The contradictions experienced by strong persons are very different from those by weak persons. So are the ways they choose to deal with contradictions. Strong persons could use a hard approach to solve contradictions, e.g. fierce competition. Similarly, the competition approach varies from one weak person to another. They have to make most of their uniqueness to form advantage in certain aspects. This may give them a chance to win over the competition.

Third, emergence of new technologies. The emergence of new technologies normally indicates the change to working or living style. These changes are associated with a large number of project opportunities. For instance, the rise of AlphaGo has drawn wide attention to artificial intelligence. This has resulted in large scale investment in artificial intelligence. The technological innovation in graphene has attracted investment in new technologies and new energies. Similarly, the technological innovation on Internet has facilitated the integration of traditional industries and Internet technologies, i.e. Internet + in a large number of projects. China’s Beidou system officially provided regional services in 2012. In the short span of five years, the Beidou system completed the feat of “from 1 to 100”. Statistics show that in 2012, the total output value of China’s satellite navigation and location service industry was only 81.2 billion yuan. This figure reached 211.8 billion yuan in 2016, an increase of 22.06% compared with 2015. Among them, the contribution rate of Beidou system to the core output value of the industry has reached 70%. Beidou’s system high-precision service is widely used in urban gas, urban heating, power grid, water supply and drainage, intelligent transportation, intelligent pension and other fields. It is estimated that the total market value of the national gas pipeline network Beidou system has reached 2 billion yuan. In addition to the gas industry, water, electricity, heat, communications and other similar municipal pipe network fields can also achieve similar high-precision applications of the Beidou system, which will form a “blue ocean” space location service of more than 150 billion yuan. The same example is sharing bikes. The realization of positioning of sharing bicycle and “electronic fences” depends on the sub-meter accuracy. According to the China Satellite Navigation and Positioning Association, the current use of the sharing bicycle in China exceeds 170 billion times per year. Based on the unit price of 1 yuan and the market penetration rate of 10%, the market for location services formed by the sharing bicycle market will exceed 17 billion yuan in the future.

Fourth, the tipping point of the transformation from the increase of quantities to the improvement of quality. In Internet era, the development of enterprises does

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49

not follow the gradual growth mode. The resource connection due to Internet technologies will result in the significant benefits or loss to the enterprise. It will be a phenomenon that frequent changes to leaders of the enterprise. Ageing population presents a significant issue to China. In 2016, the number of Chinese people over 65 years old has reached 150 million, accounting 10.85% of the total population in China. The next 2-3 decades will see rapid growth of ageing population, with an average growth rate of 3% every year. It has been forecasted that the ageing population will reach 243 million by 2020, 18% of total population in China. This proportion will reach 25% by 2030. This presents significant opportunities for age care industry. The market value potential of age care will reach 100 trillion RMB. It can be predicted that the number of age care PPP projects will experience rapid growth in the next decade.

In African grasslands, lions have a common approach to hunt prey. Lions will stand very high to watch the group of antelopes and connochaetes, determine which to be hunted, walk towards the prey slowly and attack in fast speed. Antelopes and connochaetes will run in all directions. However, lions should not give away the determined target even some antelopes and connochaetes run towards them. Otherwise lions will get confused and end up securing nothing. This is the similar case for the relationship between the analysis of project opportunities and project management. The analysis of project opportunities is similar to drawing a pancake. It is necessary to draw a circle, covering the entire process from inputs to outputs. In particular, it is imperative to clearly specify the sources of profit and how these will be guaranteed. Then project management is the process to cook the pancake according to the recipe. It is “finding something from nothing” for the identification of project opportunities. It is worth noting that project opportunities are not generated from simply subjective assumptions. Rather, project opportunities derived from the desire for future development and success, and demand for solutions. As a result, external stakeholders could be identified and the evolution trend of contradictions amongst stakeholders can be located. Consequently, project opportunities are identified.

Erik Månsson, Sweden, Vice Chairman Projektforum (IPMA Sweden)

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Since I had the privilege to assess the first Chinese IPMA Project Excellence Award Winner, the manned spaceship Shenzou 6, in 2006, I have been able to closely follow how Chinese project excellence has now established itself as the new benchmark for all types of projects and sectors. This book offers valuable insights to a Western reader about some important dynamics that help to explain why the best Chinese projects are so competitive in an increasing complex and globalized world. Professor Ding explains the Taiji concept of project management enabling us to better understand how the creative tension between opposites could be resolved and harvested by using the apparent polarities as a basis for synergy. Many leaders in the West are uncomfortable with or not used to handle paradoxes such as: Short-term versus long-term; Risk versus opportunity; Thinking versus feeling; Dream versus reality; Altruism versus self-benefits etc. This chapter argues that successful leadership is not only about identifying contradictions, but also the leadership art to stimulate contradictions and convert contradictions to project opportunities. Western leaders too often have a silo mentality, which makes it difficult to see the big picture, as well as having a tendency to over focus on risk management. The Chinese approach is more holistic, which enables a wider screening of opportunities and new horizons, which is a proactive approach to manage in the VUCA world. Maybe, it is even this creative potential for project management, with a proactive approach towards finding opportunities and the right timing, where the Chinese principles explained in this book could most concretely equip Western managers with a new mindset. Of course there are already trends in this direction moving away from a previous focus on models, methods and processes towards a new focus on people, stakeholder management and interpersonal relationships. Above all, I see this book as an invitation to Western mangers and practitioners to get a new perspective on Eastern project management through the Taiji approach. This would be a first necessary step to introduce a new awareness about the contradictions between Eastern and Western project management that could eventually be resolved by evolution of project management to a global perspective. It is my strong personal belief that this is indeed our most important objective to jointly bring our project management capability to a new level where we are able to better cope with our global challenges as humanity such as climate crisis and biodiversity.

Chapter 4

Balancing the Public Interests and Private Interests of Project Stakeholders

Individuals have private interests while the monarch has public interests. Eight Strategies, Han Feizi

Decisions need to address the following questions after the emergence of project opportunities: do we need to proceed with this project? How to proceed with this project? Opportunity simply indicates a probability of project to be initiated. It is a judgment of future from the current perspective. By contrast, decision will transform this judgment into a strategy. The analysis of internal and external contradictions is used to determine if these contradictions could be solved. Various technologies could be used to deal with internal contradictions which could be implemented by different stakeholders. Therefore, during the project decision-making process, external contradictions will be reflected in contradictions between various stakeholders’ demands derived from those technological approaches. The analysis of project opportunities will not be converted to real projects until it went through the decision making process.

Public Interests Are Derived from the Collection of Private Interests Taiji logic oriented decisions are made according to trade-offs in specific context, which may indicate the flexibility and uncertainty. Therefore, it is a common approach for Chinese people to use some fundamental demands (aims) as key supplements to short-term objectives during the decision-making process. To Chinese people, aims are relevant to long-term development of individuals, or risks. “People who do not think far enough ahead inevitably have worries near at hand.” Aims are for thinking far ahead whereas objectives are for dealing with worries near at hand. Aims and objectives are complementary to each other. Many heroes during the Three Kingdom era were successful even though they did not keep their word. This is because they are persistent to their visions. By contrast, Lv Bu failed despite his super physical © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_4

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Fig. 4.1 VUCA World

strength and support from strategists such as Chen Gong. This is because he did not have clear aims and belief, which made him pay too much attention to trade-offs in specific context and eventually this lead to his death after defeat. Project is full of risks, especially in the era of VUCA (Fig. 4.1),1 i.e. Volatility, Uncertainty, Complexity and Ambiguity. In the book How Google Works2 written by Eric Schmidt and Jonathan Rosenberg, it is stated that “The best way to fend off Microsoft was continuous product excellence, but the best way to achieve that excellence was not via a prescribed business plan, but rather by hiring the very best engineers we could and then getting out of the way… MBA-styled business plans, no matter how well-conceived and thought out, are always flawed in some important way.” In such world, it is not possible to predict the future or use a definite project to fulfill aims. In most cases, the original performance objective are not achieved. These include: severe cost and time overrun in Sydney Opera House, rebel of residents due to severe cost burden in Beijing-Hangzhou Grand Canal. However, the project management failure in these projects could not deny the significant contributions of these projects to the long-term development of the nation. Therefore, it is necessary to distinguish “project success” from “project management success”. Otherwise, the responsibilities of project decision makers and project managers will not be clarified. Project manager is responsible for project management success whereas project decision maker is responsible for project success.

Compared to objectives, aims are more general and fundamental. Aims normally derive from desire or wish, with strong sense of philosophy. By contrast, objectives are specifics of aims, which can be used to determine if aims have been achieved. Aim is a long-term, qualitative direction. It is similar to the definition of “limit” in mathematics, i.e. a value could be closed indefinitely but never reached. As specific and quantifiable outcomes, objectives are “spokesman” of aims, with strong management characteristics. The determination of objectives is a process to deal with contradictions between project stakeholders’ demands. Project is not simply a temporary activity. Rather, it is the reason that all stakeholders work together, and the platform to satisfy all stakeholders’ demands. A project will not be successful until all stakeholders’ demands are satisfied. Similarly, stakeholders need to perceive that their demands can be satisfied by this project. 1 VUCA

is an abbreviation for Volatility, Uncertainty, Complexity, Ambiguity. The term VUCA is derived from military terms and has been widely used since the 1990s. 2 How Google Works is authored by Eric Schmidt and Jonathan Rosenberg. Its Chinese version was published by CITIC Publishing Group in September 2015.

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The determination of project objectives is a process that all stakeholders reach a deal. Of course, the satisfaction of stakeholders’ demands does not necessarily mean fairness. Reaching the deal might be associated with power, money, threat or even death. However, in typical projects, the most significant challenges for the determination of project objectives are to find the overlap between public interests and private interests; and to embed private interests into public interests. The key to project decision making is to deal with contradictions between all stakeholders’ private interests. These private interests could be covered in project objectives or embedded in project plans. Guanzi stated: “Among the ways of winning the hearts of men, nothing is as good as giving them benefits.” Despite the critical role of public interests, it is crucial to satisfy individual’s demands as the fundamental functions of managers. Chinese people are reluctant to talk about private interests. We often expect others can proactively consider our private interests. This can not only maintain our image but also satisfy the social ethics in terms of public interests. This might be the reflection of the importance of face in Chinese people but also the biggest contradiction in the determination of project objectives. HuaWei Co. Ltd. advocates “Everyone is encouraged to follow the suit of Lei Feng and Jiao Yulu, however we will not let them suffer loss”. This is the appropriate cognition of such contradiction. “Vision of big picture” is the common term used by Chinese people to deal with contradictions. It indicates taking a long-term and broad approach rather than short-term or individual interests. There is traditional Chinese speaking: “With the skin gone, what can the hair adhere to”. A thing cannot exist without it. This is a classic Chinese dialectical thinking.

The contradictions between public interests and private interests should be solved during the setting of project objectives. It is more likely to achieve public interests if private interests are clarified at the beginning. By contrast, public interests could be compromised if private interests are vaguely defined and communicated within stakeholders. This is reflected in traditional Chinese speaking such as: “Ugly words first” and “Specify terms clearly at first and use a good deal of courtesy later”. Otherwise the project will suffer, e.g. the least price bid does not guarantee maximum value. The supplier may attempt to use inferior materials and turn out substandard goods. Alternatively they may seek for variations, which will result in the cost escalation. In China, contract clause such as “Parties hereto may revise or supplement through negotiation matters not mentioned herein” is used to deal with such issues. Iterative attempts are required in order to solve contradictions between public interests and private interests. It is necessary to be aware that the demands specified in contracts are not necessarily the actual desire. Chinese people do not speak about demands directly so it is imperative to take proactive approach to understand these demands. This is related to “face” for Chinese people. The contract clauses are important. However, Chinese people are so clever that they can creatively find ways to secure their own interests, e.g. “Where there is a policy, there is a countermeasure.” Everyone’s interests and needs will vary according to his/her social status and timing. In general, interests and benefits could not be simply presented in monetary term and they are not static. There is a traditional Chinese speaking: “nobody can go

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without money”, which indicates the timeliness for the effectiveness of such interests and benefits. Time is a crucial parameter for the project decision-making as it can be used to tradeoff with many other resources. Project objectives are not simply delivering a house or a new product. Technical indicators of products are not the fundamental objectives of the project. Rather, the fundamental project objective is to satisfy all stakeholders’ demands. Project is the platform to satisfy these demands. During project decision-making process, it is imperative to distinguish the fundamental demands of stakeholders from the technical specification of project deliverables. A project is not worth initiating unless all stakeholders recognize its benefits and perceive their demands will be satisfied. Therefore. The responsibility of project success is not simply on the project team led by the project manager. Rather, it is crucial to engage all project stakeholders. Project tasks are assigned to not only project manager but also all project stakeholders. As Guanzi stated: “Unless it is something that the people may carry out as the result of a single order, it cannot be considered very good. Unless it is something that everyone can do, it cannot be considered to have great merit.” Management measures will not be effective unless they comply with human nature. It is not unusual for someone to look after his/her own interests and benefits. Therefore, during the setting of project objectives, it is necessary to be cautious of those who say yes and mean no. Therefore, it is necessary to specify terms clearly at first and use a good deal of courtesy later. As Feng Dao said in “Rong Ku Jian”: “A real villain may have appearance of the gentleman but is truly mean and despicable. A true gentleman may look like villain but is very generous by heart.” It is crucial to take stakeholder’s individual demands into consideration. Project stakeholders should be educated that they should bear corresponding responsibilities so that their demands can be satisfied as a return. As a result, they will keep public interests in mind. Indeed, stakeholders will not keep public interests in mind until their expected value is achieved (Fig. 4.2). Project objective is the collection of all stakeholders’ demands. Each stakeholder will take a different view of the project, from the perspective of his/her own interests. Traditional project objectives (i.e. schedule, quality and cost) only form part of demands of client and suppliers. As stated in Guanzi: “Accomplishments reached under importunity are not reliable. Works kept under demanding are incredible.” It is unlikely to achieve project success if only organization’s objectives were considered whereas individual’s demands were overlooked.

Unity of Opposites Between Behaving and Doing Things We need stabilized mind especially in a changing world. Then we can do a reference to clearly understand the changes to the external environment. “The point where to rest being known, the object of pursuit is then determined; and, that being determined,

Unity of Opposites Between Behaving and Doing Things

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Fig. 4.2 Integration of public interests with the private interests of stakeholders. A Needs of stakeholder 1 private interests B Needs of stakeholder 2 private interests C Needs of stakeholder 3 private interests D Needs of stakeholder 4 private interests

a calm unperturbedness may be attained to” (The Great Learning, Book of Rites).3 This is so-called “the power of meditation” to Chinese people. Project stakeholders are those parties been connected with the project through various benefits. There is no need of stakeholders if there is no project; and vice versa. To deal with this challenge, we should focus on our own interests and employ Zhongyong strategy. After our own interested are clarified, we can then identify our stakeholders who can play a role in achieving our objectives. It is the similar case for determining stakeholders to other people. Project stakeholder exists because of each individual’s demand rather than a simple project-oriented concept. This is the traditional Chinese speaking: “Being a better person before you get a good career.” The key of project governance is to form relationships amongst project stakeholders. These relationships could be in terms of power or economy. No matter the classification approach for stakeholders, the inter-personal relationship should not be overlooked. Confucius stated: “Do not do to others what you would not want them to do to you.” This statement is not applicable in business as it assumes that everyone shares the same value system. For project governance, it is very likely that the value system varies from one stakeholder to another. “Being a better person” focuses on someone’s own value system. By contrast, the mutual benefits to all stakeholders are necessary for “doing better things”. We should try “being a better person” in life and “doing better things” in work. “Being a better person” and “doing better things” are in parallel rather than in order. It is important to differentiate them. Otherwise we might not be able to doing better things or being a better person.

Those focusing on “being a better person” will demand the way of “doing things” follows the principles of “being a better person”; and vice versa. This is exactly why principle of management is “using right person to do right things properly in 3 It

is about Confucian works from the Qin and Han Dynasties. It was belived that Zeng Shen was the author.

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right way”. The first priority of project governance is to ensure right projects, i.e. those satisfying stakeholders’ interests. Right persons will not be identified until right things are determined. It is worth noting that right person does not indicate good or bad people in this context. A good or bad person is defined according to our value system. By contrast, a right person is according to the project tasks. It is likely that a right person may share the similar value system with us. However, it is not necessary that our value system is recognized by others. Similarly, our value system may not be appropriate or efficient from other people’s point of view. In the era of VUCA, the identification of project stakeholders is an interactive process which is featured with spiral evolution (Fig. 4.3). The first step is to define the expectation and objectives. Most people do not know what they really want. It is not unusual that we mix up objectives with ways to approach these objectives. A simple example is: an enterprise may spend most resources in analyzing competitors rather than customers’ demands during the development of marketing plans. It is very common that we perceive that defeating competitors is equivalent to securing customers. As a result, the “price war” is very common. To make up the loss due to “price war”, it is not unusual that substandard materials are used and project quality is suffered. This is detrimental to both long-term benefits and reputation of suppliers, i.e. neither “doing better things” nor “being a better person”. When doing business, Chinese people rely more on interpersonal relationships and friends rather than contract. However, it is not unusual that the friends receive even worse deal, which is detrimental to the friendship. A vague definition of objectives will have negative impacts on “doing better things”. As a result, we might be attracted by other opportunities which significantly reduce the reliability of project value alliance. In addition, the project governance structure is not stable or reliable.

Fig. 4.3 Iterative process to identify project stakeholders’ needs

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The second step is to identify project stakeholders. It is very rare that project can be completed by ourselves. In order to obtain what we want, the first step is to fulfill other people’s demands. It is not easy to clearly identify project stakeholders. The stamp on contract is made by a staff but the most powerful person is normally behind the scenes. This is very common in China. In the context of project governance, the fundamental support by stakeholders to the project is their resources, e.g. fund, information, human resources and even power. However, people who assign resources and people who own resources can be different. It takes time to identify those who have authority and power to assign resources, especially those external stakeholders. More importantly, we have to identify all these “right person” in one hit. We will waste a large amount of time is we did not find the “right person”, which is similar to missing the exit in highway. In Chinese culture, there is never a pure formal organization. It is always the case that formal organizations are mixed up with informal organizations. In addition, it is very common that informal organization is more powerful than formal organization. This is exactly what Chairman Mao stated: “The most important thing to do is to identify friends and enemies”. Xiang Yu always trusted people sharing the same surname whereas Liu Bang was always distant from relatives. As a result, those not sharing the same surname with Xiang Yu were disappointed due to lack of opportunities and incentives. By contrast, Liu Bang attracted a lot of talents due to fairness and opportunities. The third step is to identify demands and expectations of stakeholders. It is difficult to identify stakeholders. It is even harder to identify stakeholders’ demands and expectations. “Face” is very important to Chinese people so that they are reluctant to speak about their expectations explicitly. This is especially the case when they want to achieve some private interests and benefits apart from the project objectives. It is not unusual that we take private interests and benefits into consideration in the project, sometime even more important than public interests of the project. Therefore, it is very common to ask the question “please talk about what you want first” during the negotiation. The hidden message is “have a guess what I really want”. The one who speaks first will suffer more risks. Experienced negotiators always spend a large amount of time to understand the counterparts so that they are better prepared for the negotiation. What is more challenging is that our counterparts do not know their expectation and demands themselves. In such circumstance, it is important for us to know our counterparts better than themselves. Liu Bang knows better than Xiang Yu the driving force of his followers. Therefore, Liu Bang always gave away titles as these titles bear fewer meanings until he rules the kingdom. More importantly, Liu Bang knows that most soldiers followed him simply because they do not want to starve. During battles, Liu Bang paid much attention to food supply which has gained strong support from Xiao He. By contrast, Xiang Yu showed less interests in food supply. The Guangwushan battle lasted for one year. Despite physical strength, Xiang Yu was so hungry that he could not ride a horse anymore. This battle ended with reconciliation. The fourth step is to explore ways to satisfy stakeholders’ demands and expectations. Solutions become obvious when the problem is clearly defined. In most cases, it is difficult to come up with solutions because steps 1-3 were not completed. In project governance, project manager is responsible for Step 4. Project managers need to use resources provided by stakeholders to develop project plans so that their expectations and demands are fulfilled. Liu Bang knows Han Xin very well. He said to Han Xin’s messenger: “What is the point of being a temporary Duke Qi? That is insignificant. Why not become the true Duke Qi?” Liu Bang ordered his subordinates to make the seal immediately while Zhang Liang took the seal to Han Xin. By contrast, Xiang Yu looked after his subordinates very well. He will feed wounded soldiers and even cry for them. However, he is reluctant to give the seal away.

The fifth step is to pursue the objectives via continuous improvement. Some stakeholders may exit and others join at various stages of the project lifecycle. A solution

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Fig. 4.4 Project networks amongst various project stakeholders

is not feasible unless stakeholders can be identified. Every stakeholder’s variation will go through steps 2–4. Sometime we may have to adjust our own objectives in step 1. Social networks are one of the most important issues to be considered for Chinese people when doing business. In projects, each stakeholder is connected with other stakeholder(s) not only within the project but also outside of the project. As a result, a complex network is formed between project stakeholders (Fig. 4.4). Each node and connection may have impacts on the project.

Risks Are Associated with Feasibility Project decision making will go through the feasibility study. However, why it is so common that projects are unfeasible even they went through the feasibility study? Mao Zedong pointed out: “Our slogan is: First, there is no right to speak without investigation. Second, there is no right to speak without doing the right investigation.”4 He believes: “We have to better understand the characteristics of the overall contradictory and related parties; to gain deeper understanding of the characteristics of contradictions. It is not appropriate to simply stand there and look far away. Similarly, it is not appropriate to see a little bit of contradictions and then attempt to solve the contradiction (e.g. answering questions, resolving disputes, handling work,

4 See

“Anti-Bookisticism” in “Selected Works of Mao Zedong”.

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Fig. 4.5 The feasible project comes from the intersection of project feasibility study and risk study

directing war).”5 During the decision making process, the first step is not the collection of data. Rather, the focus is played on making assumptions. Consequently, data are collected based on these assumptions and then used to validate these assumptions. It is very common that feasibility study is based on a series of assumptions where technical solutions and economic viability are validated. However, these analyses do not take uniqueness of each project into consideration. In some cases, assumptions were made not according to real situations in order to secure approval. In other cases, fake data were used to match conclusions of feasibility study. As a result, the rigor and reliability of feasibility study are very low. It is imperative to use dialectical logic to deal with this issue. The antonym of “feasibility”, i.e. “risk” should be used to manage and control project risks. As a consequence, the feasibility of project is improved (Fig. 4.5). The common source of project risks is the tradeoff between public and private interests by various stakeholders. The world is objective by nature however each person may perceive it differently according to his/her subjective view. As a result, we may choose those data according to our expectations no matter on purpose or not. In general, factors related to project characteristics will be taken into consideration during the identification of project risks. These include: fund, environment, equipment and materials. These risk factors vary from one project to another. Not only does it take professionals to identify these risk factors, many of them are also hard to manage. According to dialectical logic, all manageable risks can be categorized into two groups: (1) risks related to individual attributes of project stakeholders, e.g. technical capability, volume of resources; (2) risks related to social attributes of stakeholders, i.e. organizational structure and operation mechanism of the project. All other risks are not manageable therefore could be presented by other terms such as luck, destiny and force majeure. The purpose of feasibility study is to be prepared for any potential issues. No matter managing which kind of risks, the major contradiction is the unity of opposites between “responsibility” and “reliability of taking the responsibility”. The scope of each stakeholder’s responsibility is limited. Such limited responsibility is corresponding to not only the scope of each stakeholder’s demands or benefits; but also 5 See

“Contradictions” in “Selected Works of Mao Zedong”.

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his/her individual and social attributes. Having someone to take responsibility does not necessarily mean that he/she can or want to take such responsibility. However, it is better not to show any doubt if someone is delegated to do something even we do have doubts to them. In professional ethics of management personnel, honesty does not equal effectiveness. The society will be full of contradictions and false if too much attention was paid to social morality whereas professional ethics is overlooked. In essence, the contradiction of project decision-making is the gaming of interests and responsibilities between stakeholders, which is the result of Pareto optimality. The contradiction at the grassroots level is reflected in the contradiction between “for public interests” or “for private interests”. It is the contradiction between “we are from all corners of the country and come together for the common goal” and “we come from all corners of the country and come together for our own goals”. To solve this contradiction, it is necessary to consider both perspectives while the starting point is the private interest of one or some people. The public interest is the intersection of self-interest, and the public interest without self-interest is nothing. Meanwhile, selfinterest is the fundamental purpose of public interest, and the self-interest without public interest will not be sustainable. During the feasibility study of the project, it is necessary to clarify the correlation between stakeholders’ demands as much as possible. As a result, we can understand the incentives and control of the stakeholders. Common mistakes in feasibility studies include: technical indicators that ignore human needs and purely focus on project outcomes, or attention is paid to the needs of an organization rather than specific individual needs. “The little ghost is more difficult to deal with than Yama” is a common problem in project communication. The reason is simple: the needs of “Yama” are different from those of “little ghost”. For “Yama”, it is possible to discuss the value needs of an organization. By contrast, for “little ghost”, it is necessary to let them to recognize the pros and cons of the project to themselves. “All roads lead to Rome”. There are generally multiple plans to achieve the same goal. In the project feasibility study, we should try to choose a technical solution that can meet the individual needs of stakeholders. The way to meet the needs of stakeholders is also a requirement, especially for Chinese. The relationship between feasibility and risks is unity of opposite, so as the relationship between each stakeholder’s demands and responsibilities. Such unity of opposites should be clarified during the feasibility study which provides critical inputs for decision making. Indeed, feasibility study is the Taiji stage of project decision making. In general, contract is used to clarify each stakeholder’s demands and responsibilities. In western world, no promise will be counted unless it is documented in contract. By contrast, there are many other ways of fulfilling commitments in China. Chinese people are more inclined to rely on moral obligations than mandatory obligations (e.g. law and contract). In some cases, this has resulted in unrealistic expectation. The traditional Chinese culture encourages honesty and integrity. These include: “if the people have no faith in their rulers, there is no standing for the state”, “what is said cannot be unsaid”, “It cannot be understood how a man without truthfulness is to get on.” By contrast, Chinese people have comparatively less awareness toward

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Fig. 4.6 Mapping relationship between stakeholders in contracts

legal system. We are reluctant to clarify demands and responsibilities in public and then specify them in the contract. Rather, we are more willing to let others clarify our demands and proactively highlight other’s such responsibilities. When conflicts emerge, we are used to negotiation rather than the court case. This is the reason the key clause such as “Parties hereto may revise or supplement through negotiation matters not mentioned herein” is introduced in the contract. The Zhongyong doctrine Chinese people used to solve contradictions whereas keeping face is “to leave good guys with ourselves and bad guys with institutions”. To achieve this, it is necessary to use structural approach to reduce the likelihood of risk events prior to the contract signing. This is far more efficient than rectifying issues after the risk event. Such structural approach is shown in Fig. 4.6. In the contract, every single demand of the client should be aligned with one of responsibilities of the supplier. “The intelligent sovereign, whenever he listens to any speech, would hold it accountable for its utility, and when he observes any deed, would seek for its merit”.6 Risk exists in the fulfillment of responsibilities from both the client and supplier. Therefore, it is critical to establish the mapping relations between commitments and fulfillment of responsibilities (i.e. risks). Consequently, the mapping relations between risks and management measures should be developed. As a result, the demands of both clients and suppliers can be fulfilled. The contract should cover at least three components, i.e. demands, responsibilities and risk management methodology of stakeholders. Sun Tzu said, “When the standing orders are not clear, and the signals not familiar, it is the commander’s fault. When they are clear yet are not followed, it is the officers’ fault.” 6 The

Six Opposites, Han Feizi. “Han Feizi” is a collection of works by famous thinker and legalist Han Fei in the Warring States period. “Han Feizi” was made after the death of Han Fei. The core of his theory is the thought of combination of law, technique and Shi based on autocracy of monarchy, upholding the historical view of evolutionism and advocating extreme utilitarianism. He thinks that the relationship between people is mainly the relationship of interests, supplemented by benevolence and education. He emphasizes the rule of law and the employment of people with interests, which has a significant impact on the establishment of China’s feudal social system after the Qin and Han Dynasties.

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It is meaningless to measure performance without clear definition of responsibilities. Clear definition of responsibilities relies on not only realistic responsibilities but also effective communication. It is not unusual to have hidden message in Chinese way of presentation. These include: “Parties hereto may revise or supplement through negotiation matters not mentioned herein” in the contract, and “to fulfill other activities assigned by the line manager” in job description. Such way of presentation is useful to maintain a certain level of flexibility within the scope of responsibility. This helps to deal with those unexpected issues. However, this may blur the responsibilities. There are two aspects of effective communication: (1) standardize the documentation of communication in order to reduce the likelihood of ambiguity; (2) mitigate risks and improve efficiency by standardizing the contents and personnel of communication while requiring communication at certain stages.

Democratic Centralism Not all project related responsibilities are carried by the project manager and his/her team. Project is not only the platform to fulfill all stakeholders’ demands, but also a product of stakeholders via cooperation. Therefore, project tasks are assigned to all project stakeholders rather than the project manager. Indeed, it is imperative to engage all project stakeholders into project decision making process. In addition, an effective project kick-off meeting plays a crucial role in stakeholder engagement. As a result, each project stakeholder can understand his/her own demands and responsibilities, and understand the project goals and corresponding strategies. Democratic centralism is the unique decision making mechanism in China. Similarly, it is the way contradictions are solved via Zhong Yong strategy according to Taiji logic. Democratic centralism combines two opposing forms of leadership: democracy, which allows for free and open discussion, and central control, which ensures unity and discipline.7 In the project context, two fundamental questions need to be addressed so that project stakeholders can play appropriate role in key decision making process. These two questions are: (1) who is responsible for project governance? (2) How do they govern projects? Who is responsible for project governance? The answer may seem very obvious: project stakeholders. However, it is easy to be said than to be done. First, not all project stakeholders can participate into the project governance, e.g. minor shareholders. The main players of project governance are those stakeholders that provide critical resources to the project. However, it is difficult to define the critical resources. For simplification purpose, all participating enterprises/departments are qualified to participate into the project governance. These project stakeholders do not participate into the project governance at the same time. Their role in project governance will be established and removed when

7 See

the Constitution of the Communist Party of China.

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they join or leave the project. Those stakeholders participating into the project governance will form a temporary “project governance committee”. Main functions of this committee are: (1) determining the project goals and principles to achieve these goals; (2) defining the roles of project stakeholders in terms of project governance; (3) deciding the benefit allocation mechanism between project stakeholders, and (4) coordinating stakeholders and dispute resolution. A representative from each stakeholder serves the role of initiating the project from that party. This representative has sufficient authority to define the priority of this project compared to other projects in the same organization. In addition, project governance committee acts as a temporary headquarter. Consequently, the inter-relationship between enterprises could be defined as the inter-relationship between the project and each functional department (Fig. 4.7). Each related enterprise provides resources to the project according to the request of project manager. These include: human resources, equipment, facility, fund, information, tools and methods. Project manager will complete all project tasks by utilizing these resources and report the effectiveness of resources to the project governance committee. The project governance committee will make the assessments and provide incentives to the providers of resources. The providers of resources are required to make most of the knowledge accumulated in the project. As a result, the probability of project failure could be reduced as each enterprise is encouraged to align their own benefits to the project goal. However, the project still could fail. Democratic centralism integrates the benefits of democracy

Fig. 4.7 Organizational relationships between various project governance roles in multi-enterprise environment

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and central control, i.e. high efficiency and low risk. This is a Zhongyong approach to deal with the unity of opposites. Project involves a number of knowledge fields and stakeholders. Therefore, it is necessary to follow a democratic approach to consider all stakeholders’ private interests. It is not unusual that different opinions between project stakeholders exist due to different interests. In such circumstances, it is necessary to use central control approach. Otherwise a large amount of time will be used to discuss and negotiate the issue. There is another critical value of democratic centralism. A project is temporary by nature but it could have long-lasting effects to an enterprise or even a region. In addition, stakeholder’s participation into the project is a dynamic process and there may have different decision makers. Therefore, it is imperative to use democratic centralism to deal with contradictions between dynamic project stakeholders and temporary project and also contradictions between the value of long-term project and organizations. As a result, the decisions derived from democratic centralism will be relatively stable. PPP projects are featured with large scale of investment, long duration and large number of stakeholders. Therefore, it is particularly important to used decision making mechanism based on democratic centralism. Criteria of project decision making include the economic viability and technical feasibility. Furthermore, it is even more important to explore the stakeholders’ demands and to reach common understanding of all stakeholders of project success. Therefore, project kick-off meeting plays a crucial role in disseminating project information within the team so that all project stakeholders share the same understanding of the project value and corresponding responsibilities. Indeed, it is crucial to ensure all decision making personnel share the similar view prior to the decision making; and all executors share the similar view after the decision making. The project decision making process will be completed after a few rounds of democratic centralism.

Antonio Calabrese, Italy, Professor of School of Management, Politecnico di Milano

The chapter sheds light on some typical features of the traditional Chinese approach when dealing with inter-personal relationship, i.e. project stakeholders in this case.

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By a very clear reasoning, Prof. Ding keeps the concept of the “unity of opposites” as central in project governance, where different, and at least apparently or partially conflicting, aims and objectives from the stakeholders play their role into the game. The guiding idea is to take enough time, since the beginning, to understand the common ground of interests and expectations of the parties, so to reduce or even avoid the risk of conflicts during the project lifecycle. This is typical of Chinese culture where being a better person comes before getting a good career, “people relies more on inter-personal relationship and friends rather than contract” and informal organizations are so relevant as formal organizations. My experience in project management, lasting since more than two decades, gave me the opportunity to understand how many conflicts, nourished by economic, financial, operational, organizational and/or personal issues, arose and were poorly managed when there was some lack in stakeholder analysis and integration. In my view this comes from not including within the project—since the beginning—the aims of all the relevant stakeholders and the benefits they expect to get. In other words, it was like the risk of future conflicts were inherent of the project and consequently their resolution less effective and more costly. The model outlined in this chapter is not just a theoretical exercise, but can help in better understanding the mechanisms underpinning interactions within a project, resulting in more successful project governance.

Chapter 5

Integrating Productive Forces and Relations of Production

Now the commanding general of the Three Armies should combine both military and civilian abilities. The employment of soldiers requires uniting both hardness and softness. In general when people discuss generalship, they usually focus on courage. However, courage is but one of a general’s many characteristics for the courageous will rashly join battle with the enemy. “The Tao of the General,” the Wuzi

“A general without capability only leads soldiers to the dead end”. Project manager plays a crucial role in project management. Therefore, the selection of appropriate project manager forms an integral part of project governance and a crucial criterion of decision making. However, the project management team is more important than project manager if the project involves the cooperation amongst people from different cultures, various departments and different disciplines. If project manager is the critical productive force of the project, the composition and operation mechanism of project management team is the relations of production of the project. The interaction between productive forces and relations of production presents the unity of opposite (i.e. Yin and Yang). The essence of such relationship is the professional ethics, competency, working mechanics of the project management team, as well as project manager’s capability to enhance the team cohesion. The formation of these elements fully reflects the Zhong Yong wisdom.

Team Is Superior to Individuals “As one fence needs three stakes, a good guy needs three fellows”. It is difficult to locate a person excellent in all aspects. It is even more difficult to form an effective team which consists of members that are excellent aspects. This is especially the case in the context of project where people from various disciplines and organizations are grouped temporarily. Their knowledge structure, way of thinking and interests vary The Wuzi, also known as the art of war of Wuzi, is an important military work of the Han nationality. It was written by Wu Qi, a famous general of the Warring States period. It is one of the representative works reflecting the military thought of the ancient Han nationality. © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_5

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Fig. 5.1 Project team links project productivity with project production relationship

significantly. They have not enough time to be familiar with each other in team building and most of them are not willing to know each other. In such circumstance, it is more effective to ensure an optimized composition of project management team rather than relying on an excellent project manager. Similarly, it is more effective to select right person of project management team than developing the whole project team. Project management team services as the connection between Productive forces and Relations of production (Fig. 5.1). The importance of talents is well recognized. More then 20 centuries years ago, Guanzi has introduced the “Human oriented” principle. On the one hand, one essence of this principle is the vision and policy which recognizes the importance of talents such as “talent is the primary productive force”. On the other hand, it contains the way of thinking such as “human is the fundamental of problem solving; human is fundamental for all works” for the governance of country, enterprise and projects. The project’s success and value depend on not only individuals (i.e. talents from various disciplines) but also relations of production which connects these individuals effectively. Indeed, project management team plays a vital role in integrating Productive forces and Relations of production. A good project management team helps to improve the efficiency of relations of production. This will facilitate the collaboration and cooperation between individual talents, e.g. 1 + 1 > 2. With a good project management team in place, each individual talent’s potentials could be identified, explored and utilized effectively. This provides all necessary support to forming the effective relations of production. Project consists of various tasks that are organized temporarily. In the context of project, various disciplines are required to complete tasks. Every individual joins the team with various expectations. It is not an effective management method to simply rely on traditional measures such as authority, financial incentive or intangible incentive. Members of project team are drawn from various functional departments or disciplines. As a result, the effectiveness of utilizing the power and authority of the project manager is limited. Due to temporary nature of project, it is not an effective approach to rely on psychological contract as the trust and loyalty could not be developed until long-term cooperation. In such environment, it is not realistic to

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expect the traditional team model. It would be more effective and appropriate to use a decentralized cooperation mechanism, e.g. assembling team only when necessary. Chinese culture pays attention to systematicity, the unity of nature and man, and the combination of reality and reality. Compared with Western medicine, Chinese medicine pays more attention to the relationship between human health and environment, diet, etc., and also pays more attention to the non-linear, indirect relationship of health management through these relationships. Traditional Chinese medicine emphasizes the combination of “nurturing” before and after “ruling”, the “blood” of the entity and the “qi” of the virtual body. Chinese medicine treats people as an open system with an interactive relationship with the environment. Weather and solar terms may become pathogenic factors and treatment factors. Every part of the body is related to the whole, so it can be passed back. Massage and cupping help to treat or prevent the lesion. In Chinese medicine, there is a saying that “medication is like using soldiers”. Chinese medicine believes that smart doctors know how to use medicine like a general. “Li”, “Fa”, “Fang” and “Yao” are the norms of diagnosis and treatment of traditional Chinese medicine. The four major elements, and “Jun, Chen, Zuo, and Zhi”1 are the methods of distinguishing between primary and secondary, mutual restraint and mutual complementation. Make different drugs form a powerful force to cure the disease.

Project is commissioned to solve contradictions. Therefore, it is necessary to identify the major contradiction and employ appropriate medical approach. The project strategy is the solution and the project management team is the medicine. The composition of project management team could follow the Chinese medical principle of “Monarch, minister, assistant and guide”. Those with obvious advantages normally also present obvious disadvantages. Therefore, it is imperative to select the most appropriate team members that are complementary. It is not necessary that the project manager is the most competent. Rather, he/she has to have the best capability to ensure the coherence of the project team. An excellent project management team should consist of: technical staff to perform specific tasks, administrative staff to provide resources and working rules, talent to generate ideas, and coordinator to solve contradictions. In China, many people know “Qian Xuesen’s question”, that is, “Why there is no master came from China?” During the era of Republic of China, Professor Mei Yiqi, the president of Tsinghua University stated: “the so-called university, not only has a building, but also a master.” “The famous education is even more respected by the world.” Nowadays, many colleges and universities have started to recruit talented staff. In these high-priced “masters” and “quasi-masters”, there is almost no one who is engaged in university administration. This is a worrying sign due to the serious imbalance between productivity and production relations. During the “Two bombs and one Satellite” project, there are very few people who are talented in both technical matters and administrative matters. Famous scientists such as Qian Xuesen, Deng Jiaxian, and Guo Shuhuai played a major role in this project. However, the success 1 “Jun, Chen, Zuo, and Zhi” is the principle of Chinese medicine. This principle was first seen in the

Yellow Emperor’s Inner Classic. “Jun” is the main medicine. If necessary, multiple “Jun” medicines can be used. “Chen” is the medicine that assists the main medicine to play a therapeutic role. “Zuo” medicine is to assist the main treatment to prove or inhibit the toxicity and strong taste of the main medicine, or the anti-adjuvant medicine. “Zhi” medicines have the effect of directing each medicine to the disease or reconciling each medicine.

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of “Two bombs and one Satellite” project is not possible without the dedication of outstanding administrative talents such as Zhang Aiping. From the perspective of development trends, the era when one Nobel Prize was attributed to one or a few scientists is likely to become a thing of the past. This is because it is increasingly difficult to make a judgment of who should be credited for inventions and creations. Most of them are the outputs of dynamic project clusters. In Chinese history, it is not unusual to have an excellent project management team yet ordinary project manager, or an excellent project manager yet ordinary project management team. It is very rare to have both excellent project manager and excellent project management team. A typical example of excellent project management team yet ordinary project manager is Liu Bang’s team. Xiang Yu is an excellent individual and manager. By contrast, Liu Bang is much weaker in terms of virtue, talents and social network. The original name of Liu Bang is Liu Ji, i.e. the third son of Liu’s family. In the historical records, his father does not have a full name. Xiang Yu chose to commit suicide as he felt embarrassed to lose the battle. By contrast, Liu Bang chose to push his son out of the carriage during the escape to reduce the load. Xiang Yu has a number of talented staff such as Fan Zeng, Zhong Limei, Long Qie and Zhou Yin. By contrast, most subordinates of Liu Bang are poor in character according to Chen Ping. However, Liu Bang won over Xiang Yu and become the first emperor of Han Dynasty. He gained the possession of the world. In essence, it is because Liu Bang has an excellent management team. This management team has complemented the drawbacks of Liu Bang in competency and character. This offers a useful reference to the selection of project manager and the development of project management team. Liu Bang stated: “When it comes to sitting within the tents of command and devising strategies that will assure us victory a thousand miles away, I am no match for Zhang Liang. In ordering the state and caring for the people, in providing rations for the troops and seeing to it that the lines of supply are not cut off, I cannot compare to Xiao He. In leading an army of a million men, achieving success with every battle and victory with every attack, I cannot come up to Han Xin. These three are all men of extraordinary ability, and it is because I was able to make use of them that I gained possessions of the world.”2 From project perspective, Zhang Liang provides critical inputs to the decision making, Xiao He provides all necessary resources, Han Xin is responsible for completing all project tasks. Liu Bang is the project manager who is responsible for decision making and satisfying all team members’ expectations. In other words, Liu Bang is “Monarch”, Xiao He is “Minister”, Zhang Liang is “Assistant” and Han Xin is “Guide”. This is the reason Liu Bang called Xiao He as “Gong Ren” (person who won merit) and Han Xin as “Gong Gou” (dog who won merit). In the fifth year of Han, after Xiang Yu had been killed and the empire was brought to peace, discussions were begun as to who had won merit and who should be enfeoffed but, because there as a great deal of contention among the officials over their respective achievements, the year passed before the matter could be settled. 2 See

“Annals of Gaozu, Records of the Grand Historian”.

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Liu Bang, now emperor, considered that Xiao He had achieved the highest merit, and hence enfeoffed him as marquis of Tsuan with the revenue from a large number of towns. But the other distinguished officials objected, saying, “We have all buckled on armor and taken up our weapons, some of us fighting as many as a hundred or more engagements, the least of us fighting twenty or thirty. Each, to a greater or lesser degree, has engaged in attacks upon cities or seizures of territory. And yet Xiao He, who has never campaigned on the sweaty steeds of battle, but only sat here with brush and ink deliberating on questions of state instead of fighting, is awarded a position above us. How can this be?” “Gentlemen,” the emperor asked, “do you know anything about hunting?” “We do.” “Now in a hunt,” the emperor said, “it is the dog who is sent to pursue and kill the beast. But the one who unleashes the dog and points out the place where the beast is hiding is the huntsman. You, gentlemen, have only succeeded in capturing the beast, and so your achievement is that of hunting dogs. But it is Xiao He who unleashed you and pointed out the place, and his achievement is that of the huntsman. Also in your case only you yourselves, or at most two or three of your family, joined in following me. But Xiao He dispatched his whole family numbering twenty or thirty members to accompany me. This is a service I can hardly forget.” None of the officials dared say anything further. The Great Ministers, Records of the Grand Historian

Therefore, it is not necessary to judge who is best amongst Zhang Liang, Xiao He and Han Xin. This is because they played different roles in the project and they are equally important to achieve the project goal. Liu Bang chose the Zhong Yong solution when he has to rank these three key personnels after gaining the possession of the world. Xiao He ranked the first however the reward was made differently: Han Xin was rewarded as King whereas Xiao He was rewarded as marquise. Zhang Liang was rewarded as “Teacher of the Emperor” due to his reputation and integrity. It is not documented in the Historical records that Liu Bang has talents in strategy or fighting skills. Nor was documented what specific team building activities have been undertaken by Liu Bang’s leadership team. However, there is obvious evidence that competencies of his leadership team members are highly complementary. In early stage of revolt, Xiao He has higher status than Liu Bang. When Liu Bang was an ordinary citizen in rural areas, Xiao He has already become the junior government official. The fundamental reason that Xiao He follows Liu Bang is “because Liu Bang is very lovely and amiable”.3 “Lovely” is the synonym of charm which can easily attract a large number of fans. These fans are not driven by benefits. Rather, they gather together due to their recognition and happiness. As a junior government official, Xiao He is very cautious. What he is missing the most and admires the most is the person with the leadership quality. By contrast, Liu Bang is willing to take risks and is able to take responsibilities proactively. This is the main reason he became the leader. Xiao He and the other civil officials were concerned for their own safety and, fearful that if they assumed leadership and the undertaking proved unsuccessful, Qin Dynasty would decimate their families, they all yielded in favor of Liu Bang. 3 See

“Xiang Yu and Liu Bang” by Sima Liaotailang.

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Zhang Liang was born in a well-known family, with strong feeling of nationalism and family, and is very idealistic. This kind of person does not pay much attention to the official position and salary. They often laugh at the secular evaluation criteria. He is proud and condescending, and it is inevitable that he will encounter difficulties in reality. By contrast, Liu Bang is precisely his companion. Liu Bang is not only able to understand Zhang Liang, but also to listen to him. Liu Bang became the best candidate for Zhang Liang to fulfill his feelings. As for Han Xin, he suffered from poverty and insults from a number of people before his debut. “In his young days when was still a commoner, being poor and without any noteworthy deeds, he was not able to get himself recommended for position as an official. He was likewise unable to make a living as a merchant and so was constantly dependent upon others for his meals, which made many people dislike him. One of persons whose hospitality he often imposed upon was the head of his village of Nanchang in Xia County. After he had stayed for several months, the wife of the village head became much annoyed. One morning she got up very early, cooked her own breakfast, and ate it in bed. When breakfast time came, Han Xing appeared as usual, but found that she has prepared nothing for him. Han Xing perceived what she had in mind and was incensed and in the end he broke off the friendship and went away.” Later, he made a meritorious deed under Liu Bang’s leadership. He refused to rebel because “The king of Han has treated me most generously, placing me in his own carriage, clothing me with his own garments, and giving me to eat from his own plate. I have heard it said that he who rides in another man’s carriage must share his woes, he who puts on another man’s clothes dons his sorrows as well, and he who eats another man’s food must serve him to death. How could I turn my back on what is right merely for the hope of gain?” It can be seen that Liu Bang’s psychological satisfaction with Han Xin is sufficient. As documented in Records of the Grand Historian: The basic annals of Emperor Gaozu (Liu Bang): “Gaozu had a prominent nose and a dragon like face, with beautiful whiskers on his chin and cheeks… He was kind and affectionate with others, liked to help people, and was very understanding.” It can be seen that although Liu Bang is idle and unwilling to do business, he is a person who looks good, loves others, likes charity, and is open-minded. He has a unique leadership temperament and has considerable influence and appeal. What’s more, he also has a mysterious color (the son of Red Emperor, who often has a dragon attached to his body when he is drunk, and there is often a cloud above the place where he lives), so for most generals and ordinary people, Liu Bang has both elegance and mystery. His generosity let everyone feel that they should follow his lead, and he is so ruthless that everyone is afraid to betray him. There was no deep friendship and team spirit between Xiao He, Zhang Liang and Han Xin. However, under Liu Bang’s leadership, cohesion was built between them so that they can fully exploit their respective advantages while avoiding their respective disadvantages.

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It Is not Necessary to Have Both Virtue and Talents It is ideal to have the combination of virtue and talent. Unfortunately, in reality, there are very few people with both virtue and talent. Even though sometimes such persons can be met, they often cannot be sought. The project success should not rely too much on engaging such person to act as the project manager. People is the focus of management. However, it is unrealistic to rely on the improvement of people’s own ethics to manage the project. “Gold can’t be pure and people can’t be perfect”. It is not appropriate to expect people’s talents and morality to do things. A person of high moral character may do nothing because of other weaknesses. By contrast, a person with low moral character can achieve better performance because of proper planning. The idea and practice of “being a good person first before doing things” are praised by many people. However, things that are praised are not necessarily effective, and may not be the truth. Some entrepreneurs declared in the media that their business success is due to the success of being a good person. However, their real success story is not necessarily according to what they said or been reported in the media. Being a good person and doing things are closely related in a broad sense (things are always universally linked). However, in terms of effectiveness, being a good person is fundamentally different from doing right things. It is not an effective management approach to simply categorize everyone into distinctive groups, i.e. heroes versus villains, or good people versus bad people. It is human nature to seek advantage and avoid harm. It is not appropriate to simply divide people into “good guys” and “bad guys” according to morality. Morality is to some extent a basis for self-discipline rather than a guarantee to discipline others. Similarly, the “integration of knowing and doing” advocated by Wang Yangming is based on the assumption that “everyone is born good”. Although advocating “conscience,” he also recognizes that “It is easy to defeat the thief, but it is difficult to overcome your own evil thoughts.” There are four types of people. If someone can both speak and act, he/she is the treasure of the nation. If someone cannot speak but can act, he/she is the nation’s great power. If someone can speak but cannot act, he/she can still be used by the country. If someone cannot speak or action, he/she is the curse of the country. XunZi, Confucian Philosopher4

It is possible that a self-disciplined morality can be achieved with some people by means of ethics. However, it is difficult to achieve for the general public. As Feng Dao put forward in the “Rong Ku Jian”5 : “Gentlemen will not do bad things, but the 4 “Xunzi“

is a philosophical work in which the Xunzi and his disciples collated or recorded others’ words and deeds during the Warring States Period. There are 32 articles in Xunzi, whose views are consistent with Xunzi’s claims. In the first 27 articles, there are also several articles, such as “ Confucian Philosopher “ may be compiled by his students. 5 “Rong Ku Jian” is a classic strategy book. Written by the five-generation prime minister Feng Dao. “Rong Ku Jian” only provides a unique perspective on the villain. As for how to define the villain, how to guard against the villain, and finally defeat the villain, the reader can see the benevolent and the wise see the wisdom.

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scourge will continue one after another; the villain is not good, but their happy life may not stop.” “The lower class people regard honesty as morally noble. The upper leaders often see graciousness and conforming as loyalty. The upper leaders will doubt honest people’s loyalty if they do not know how to conform. As the flattering people cannot maintain the integrity, the lower class will abandon them.” “Gentlemen don’t pull gang together, and there are very few people who are willing to help in the event of disaster. The villain is good at making friends, and when it comes to gaining benefits, there is no shortage of people who can do their best to help.” Although it is far from the noble moral standards, it is a summary of actual life, and even a summary of many cruel lessons. In the context of project, the project stakeholders may have different cultural backgrounds, religious beliefs, and life experiences. Therefore, their values may vary, so as their understanding of morality. Even in the same organization, the understanding of morality may vary due to differences in status. The value of the talents in the interpersonal relationship at work is explained in Du Xin Shu, that is, “Good character can’t make the leader happy; the leader appreciates the talent of the person. Talent cannot convince subordinates, and the subordinates respect him for his forgiveness.” According to this statement, for the leader, it is better to have subordinates with talents than with good integrity. For the subordinates, it is better to have leader with generosity than with talents. Therefore, it is difficult and not necessary to obtain both talents and integrity. To a certain extent, the value of management lies in the position of the organization to make up the drawbacks of the individual’s morality or ability. The expectation of one person to have both talents and integrity compromises both the manager’s responsibility and the value of management. There is a fundamental difference between morality and laws, that is, morality constrains people’s words and deeds through internal values, and the laws constrain people’s words and deeds through external interests. Any institution and management system will have limitations; projects, due to their uniqueness, would cause institution to have even more limitations. In such circumstance, the moral level of the project manager plays the most important role in dealing with these limitations. The characteristics of the project manager’s work are determined by the characteristics of the project. The uniqueness and temporary nature of the project means that each project’s management method is different from or is somewhat outside of the enterprise management system. In addition, as the traditional Chinese saying goes, “The general should judge and act according to the real situations at the battlefield and thus doesn’t need to obey all the orders.” However, “absolute power results in absolute corruption”. Project managers who are out of bounds are more likely to bring disaster to projects and businesses. According to Guan Zi, if the leader can’t do his own thing and take his own responsibility, the subordinates will take advantage of the loopholes. In addition, within the enterprise, the viewpoint of functional departments is different from that of the project team. The former is responsible for the functions within the enterprise, whereas the latter is responsible for the results within the scope of the project. Meanwhile, the performance of the project is more visible than that of

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functional departments. Due to uniqueness nature of project, project team will be assigned some authority beyond the regular management system of the enterprise. As a result, other staff (e.g. from functional departments) may be jealous of the project team. For the project governor, it warrants attention to consider how to give the project team enough trust within the governance mechanism to produce the effect of “He will win who has military capacity and is not interfered with by the sovereign”.6 The close minister of the monarch does not necessarily need to be wise. The monarch thinks that someone is wise and listens to his opinions, and then discusses the person’s speech with the nearest minister. This is to discuss wisdom with stupid people. The close minister of the monarch is not necessarily virtuous. The monarch thinks that someone has virtues and courtesy of him, and then discusses his conduct with the nearest minister. This is to discuss virtue with people who are not good at morality. The wise man’s scheme is judged by stupid people. The character of the sage is measured by the unwise, and the morally wise and intelligent person will feel shame and the monarch’s judgment will be ridiculous. Han Fei Zi: Gu Fen

In the traditional Chinese culture, there is a saying that “do not doubt people you decide to employ; do not employ people if you are doubting them”. The two seem to be juxtaposed. However, the implicit premise of “do not doubt people you decide to employ” is that “do not employ people if you are doubting them”. In a traditional society, the relationship between people is relatively stable, and people can accumulate trust in a long period of time. On the basis of trust, there are conditions for letting go of these “no doubt” talents. The trust between people is not unconditional, it requires the guarantee provided by the system. The precondition for “ do not doubt people you decide to employ; do not employ people if you are doubting them” is that there is a guarantee from the control system. Completely dependent on the people without the management system often result in tragedies. By “letting the system to become the bad person”, we can keep the image of being good. Human nature has the elements of both virtuous and evil. This is determined by the inherent characteristics of human beings as animals. What makes a king a king is always his position of authority. Therefore, if he loses this position of authority, his ministers will control him. When the position of authority rests with his subordinate officials, the king is controlled by his ministers, whereas when it rests with the sovereignty, the ministers are controlled by the king. Orders are more precious than jewels. The altars of Land and Grain take precedence over family relations. The laws are more important than the people. Prestige and power are more to be valued than ranks and salaries. Thus, do not disregard orders because of precious jewels. Do not consider your altars of Land Grain secondary because of family relations. Do not twist laws and statures because of love for the people. Do not share your prestige and power because of ranks and salaries. On complying with the Law, Guan Zi

It is a common saying that morality should be given higher priority if it is difficult to have both morality and talents. The rationale behind this statement is that the person with poor ethics can cause more harms. However, this statement is debatable 6 See

“Attack by Stratagem, The Art of War.”

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because it does not take into account the role of management and governance. The impact of governance mechanism on the manager is not taken into consideration where the responsibility is entirely placed on the project manager. In other words, this statement is only valid in an environment where there is a lack of management. Compared with functional managers, project managers have greater flexibility and authority. Therefore, it is imperative to a balanced approach between centralized and decentralized management. Statements such as “The general should judge and act according to the real situations at the battlefield and thus doesn’t need to obey all the orders” and “He will win who has military capacity and is not interfered with by the sovereign” are well recognized. However, these depend on extremely harsh prerequisites. Any trust has a premise. We have luxury to become good guys because the institution and mechanism act as “bad guys” for us. It is difficult to get things done in an organization where everyone is a “good guy”. It is not enough to use the virtue and the talent to classify the project team or project manager. This two-dimensional classification method simply ignores the value of management. We should fully recognize the value and responsibility of management, and classify the project team according to the three dimensions of virtue, talent and management rules (see Fig. 5.2). As a result, the advantages and disadvantages of various types of teams can be identified. Consequently, proper appointment and control can be made accordingly. This also reflects the doctrine of Zhong Yong. The ideal project team is both ethical, talented, and acts in accordance with the rules of management. However, such perfect team can be encountered whereas cannot be requested. The identification of such perfect team should not be considered as the focus of management work. Special attention should be paid to the team that is ethical, Fig. 5.2 Types of project teams

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talented but not willing to abide by the rules of management as it is easily separated from the overall rules of the company. As a consequence, such team can generate high local efficiency but is detrimental to the entire system of the company. Such team is more likely to gain recognition because of their outstanding performance and ethics in local areas. On the other hand, the overall losses derived from them are more subtle. Guan Yu is the most typical case in the history. He is a representation of loyalty and martial arts. However, he paid more attention to personal values than national strategies. Although such people have caused great losses to the country, they are well-known in the public and have been admired by the world. This is helpless to the doctrine of management. However, such a team can be responsible for new projects that do not have a mature management system. A team is the most helpless if it has virtue, complies with management rules but does not have enough talents. Because of their good character, they often gain sympathy when they fail to complete the project or even result in losses to the project. This is an obedient and disciplined team that is suitable for projects that can be completed step by step. One of the most critical values of morality is to make up the loopholes in the rule of law. However, such team is likely to rely too much on management rules. All projects are unique by nature. As a consequence, the universal institution of project governance and project management is most vulnerable to the specific projects. The enterprises that only rely on management rules will be mediocre, so as the projects. It is more likely that we have a team that is talented, complies with management rules but is morally flawed. Similarly, it should be paid much attention as it reflects value of management and production relations in the context of projects. It is better to emphasize professional ethics rather than the broad social morality. Professional ethics lays the foundation of social morality but is different from social morality. For lawyers, they can choose whether or not to defend a notorious bad person. This choice has a certain relationship with their social morality. However, once lawyers decide to defend it, they take the full responsibility and should keep the client’s secret. For the project manager, the professional ethics is to regard the project stakeholders as the clients, and to consider their fundamental and long-term interests based on the contract terms or other agreements. It is an effective cooperation mechanism that combines morality, talents and management rules by employing a Project Legal Identify system. It is also a Zhong Yongoriented cooperation mechanism between employees and shareholders. People are vulnerable to changes. Instead of expecting loyalty to each other forever, it is better to set a clear period and scope of cooperation. This helps to ensure the cooperation mechanism is in place prior to the cooperation needs, and to reduce the waste of resources. Huawei does not have academicians, we only have “Yuan Tu”. Don’t join Huawei if you want to become an academician. Ren Zhengwei

The so-called “Yuan Tu” by Ren Zhengfei is “engineering businessperson.” The aim of research and development of products by enterprises is to achieve the market

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success (business success) rather than inventions or dealing with Goldbach’s conjecture. Those scientists who hold the salary of the enterprise but are concentrating on discovering scientific truths may gain high respect. However, they are not professionally ethical to the enterprise. Enterprises prefer to support these scientific research in a donation manner, rather than covering them in the regular R&D agenda. This will help to avoid the misperception. In a changing world, more and more people are no longer dependent on a company in the long term. Rather, they are more faithful to their profession. It is more likely to have a high level of professional division of labor and dynamic collaboration mechanisms in future projects. In order to find their own roles and increase their ability to cooperate in dynamic project opportunities, it is necessary to improve not only their professional competency, but also their professional ethics. This is because professional ethics will significantly reduce the cost of stakeholder management in dynamic projects. It presents a significant challenge to evaluate and recognize the professional ethics for human resource management in the future. The first component of professional ethics is professional sentiment. Originated from the respect for our own profession, it is reflected in the enthusiasm and persistence of pursuing professional values. Such enthusiasm has naturally become the habit of our lives. Professional ethics is an internal driving force for us to think about and solve professional problems. It can make us unyielding despite risks and setbacks. It is a guarantee to avoid short-term effects derived from the temporary nature of the project. Professional reputation is the second component of professional ethics. The degree of innovation varies from one project to another. Therefore, professional reputation is required to ensure the quality of these innovative work. There is a traditional saying in China that “The writing reflects oneself.” The project team is formed due to temporary work. As a result, there is not necessarily a deep understanding between project team members. Similarly, the project team members do not have luxury to understand each other in depth. The quality of work can be judged by the reputation of the person who undertakes the work. Such credibility will be assessed by its track record and previous partners. The third component of professional ethics is the initiative to take responsibility. Every project has a certain level of creativity which is associated with risks. Project team members need to have an open mind and the courage to take on these risks. It is not a good project team if it sticks to the rules and is unwilling to give up their past successful experiences. It is one of important criteria to assess professional ethics that we do not simply shirk responsibility. Similarly, it is a prerequisite for the project leadership team. It is more and more difficult to rely on administrative power to manage projects. Project stakeholders come from different organizations and different knowledge fields. As a result, the project manager cannot simply rely on commanding as the management approach. Project managers are often “managers” on titles. Their power,

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authority, and influence are weakening. By contrast, they are playing roles as coordinators, administrative service providers, and thinkers. In such context, important indicators of project leadership team’s competency are: the character, personal charisma, as well as the willingness, courage and capability to take responsibilities. For the specific role of project manager, professional ethics also requires an important premise, that is, consistent values. The cohesiveness of the project manager comes from adhering to values and tolerance for different types of partners. This also reflects the doctrine of Zhong Yong. Only with consistent values can we find a way out in changing, unpredictable projects. As a result, we can maintain the flexibility of adapting to local conditions without losing our initial vision. Similarly, we can easily reach the consensus in the events of conflicts amongst stakeholders. We can also accommodate the conflicts amongst stakeholders in terms of ideas and methods due to different disciplines, interests and personalities. (We should have) consistent and correct political direction, hard and simple working style, flexible strategy and tactics. Mao Zedong’s inscription for the Chinese People’s Anti-Japanese Military and Political University in 1938

Zhang Juzheng, the first-in-command minister of the Ming Dynasty was pursuing the reform of the government. He advocated the appointment of “Xunli” rather than “Qingliu”. He classified all government officials into several categories. The first category is the incompetent corrupt official, who are purely parasites in governments. The second category is “Qingliu”. They behave well, and they love the people. But these people are often famous, and they refuse to be flexible when working. They often end up with gaining the reputation of clean-handed official but very few can remember what they have done. The third category is “Xunli”. They focus on doing things and strive to make things happen. The first type of officials have to be removed and the second type of officials could be used to a certain degree. However, “Xunli”, the third type of officials is what Zhang Juzheng really appreciates and tends to appoint. The focus of “Qingliu” is on being a good person whereas the focus of “Xunli” is on doing things. However, an official will be mediocre if he/she only concentrates on being a good person rather than doing things. By contrast, a government official will suffer from corruption if he/she concentrates on doing things but ignore being a good person. “Xunli” focuses on professional ethics whereas “Qingliu” focuses on social or ethical ethics. All projects are unique and temporary which needs cooperation amongst various stakeholders. In such context, the importance of “Xunli” is greater than that of “Qingliu”. In the Long and Short Sutra, Zhao Wei criticized a principle of Confucianism, i.e. “It is Confucianism to be able to pass on the sage’s profession without being able to perform the administration.” This warrants reflection from everyone.

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One Person Will not Be Talent Without Competency It is not an easy task to identify excellent project managers and project teams. Therefore, it is imperative to adopt appropriate management mechanisms. Management has inherent flaws. There is no absolutely excellent project manager, but there is a relatively uniform standard for selecting a project manager. No one is perfect. It is fine that the project manager is flawed as perfection is not the standard for selecting a project manager. Rather, the selection of project manager should pay more attention to the competency by matching the role and capability. The capability of project managers to match their roles in project management and project governance needs to change as they need to resolve conflicting changes. The emperor often spends time with the teacher (the person who knows better than himself). The king is often with his friends. The person who dominates is often with his subordinates, and king losing his kingdom is often with the servant minions. Strategies of the Warring States

We eat because we feel hungry and we put clothes on because we feel cold. The value of clothes and food varies according to our demands. Similarly, the standard of talents is relative to contradictions. Those who can resolve contradictions are talents; those who cannot resolve contradictions are not talents. Managers need to understand the effective approach to allocate staff. It is not unusual that outstanding scientists lead major research projects, outstanding scholars serve as university presidents, and excellent actors play role as the director of movie. However, the probability of their failure to accomplish management tasks is higher than what we thought. Despite this, these “saviors” carry the unrealistic expectation for the success. There is a misperception that a person with a particular advantage in some areas is equally talented in other respects. Such misperception warrants attention. Guang Zhong was sick in bed and when Duke Huan went to visit him. The duke asked, “You have become very ill, Zhongfu (Teacher Zhong). Should you fail to recover and it is our misfortunate that you do not arise from this illness, to whom should I transfer the government?” Guan Zhong had not yet replied when Duke Huan continued, “what about Bao Shu?” “Bao Shu is a man of quality,” replied Guan Zhong, “but if he were to attempt to apply his way of doing things to a state of a thousand chariots, people would not accept it. Even though he cannot take over the government, as a person he is extremely strong in liking what is good and hating what is evil. If he were to see a single evil deed, he would not forget it to the end of his life.” “Then who can do it?” said Duke Huan. “Xi Peng can,” replied Guan Zhong. “Peng is a person who is good at adhering to the goals of his ruler while seeking information from subordinate officials. I have heard that those who bestow virtue on other are called benevolent, while those who bestow wealth on others are called good. Those who use their skills to vanquish others are never able to make people submit, while those who use their skills to nourish people never have people who do not submit. There are things he does not know about the government of the state and the affairs of the royal house, but definitely Peng is the one. Moreover, Peng is a person who does not forget his duke’s household when at home, nor his own family while residing in the

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household of the duke. In serving you he will not be of two minds, but will also not forget his own character. He gave the gifts that he received from the state of Qi to fifty destitute households without anyone knowing it. Such is his great benevolence! That’s Peng!” The Commandments, Guan Zi

The old saying goes: “In peacetime, the noble character of the morality is honorable; during the war, the people who have worked hard should receive a great reward.” Zhuge Liang also believes: “If someone is looking for Self-cultivation, s/he should read Lao Zi’s book, which however is not suitable for warriors. Shang Yang is great source for laws however is not suitable for education. Su Qin and Zhang Yi are good at flickering and lobbying, but they cannot be used to form an alliance. Bai Qi is great in attacking cities, but he killed too much and could not compile the soldiers. Zi Yan is good at tricks to enemy, but can’t save himself. Wei is famous for trustworthiness however is not suitable if adaptability is required. Wang Jia will have much better performance with good king. Xu Zi is good at assessment, but cannot be relied to cultivate characters.” The advantages and disadvantages of human beings are relative to their roles. In terms of employing people, the principle of wooden barrels cannot be adopted. That is to say, the weakness of a candidate should not be adopted as a selection criterion. Rather, attention should be paid to his/her capability to make most of advantages. The weaknesses are not important unless they are related to the role, so as the strengths. Everyone has their strengths and weaknesses. Following an appropriate approach, we can easily identify the project manager who meets the requirements. By contrast, it is difficult to locate a satisfactory person if strictly following the selection criteria of “Benevolence, Wisdom, Faith, Bravery, and Strictness”. Those officials who are honest, diligent and loyal to the people should be good officials. However, the fatal weakness of these people was pointed out in the “Art of War”, that is, “ There are five dangerous faults which may affect a general: (1) Recklessness, which leads to death; (2) cowardice, which leads to capture; (3) a hasty temper, which can be provoked by insults; (4) a delicacy of honor which is sensitive to shame; (5) over-solicitude for his men, which exposes him to worry and trouble.” On the contrary, those who have many problems and are hated by others may have a lot of value. Only after Bole (good horse selector) came into the world were there horses able to gallop one thousand miles a day. Such horses are common, but a Bole is rare. So even fine steeds, if mishandled by slaves, will perish in their stables without being known as good horses. “On Horses”7 , Han Yu There is no need to worry about lack of competent ministers when governing the world. What should be worried is that no king will hire them. In other words, talents are everywhere, and the most important thing is to discover and appoint them. “On Governing the People”, Guan Zi 7 “On Horses” is an article borrowed by Han Yu, a writer of Tang Dynasty. It was originally the fourth

part of “Za Shuo” written by Han Yu. The title of “On Horses” was added by later generations. This article takes Horses as an analogy, talking about the talent problem, showing the author’s cynicism and feelings of resentment. It expresses the author’s strong indignation that the feudal rulers could not recognize talents, did not value talents and buried talents.

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5 Integrating Productive Forces and Relations of Production All talents can be classified into nine categories. The first category is those with virtues. Such talents can be used as the foundation of the political power. The second category is the talent of governance. These talents can be employed to investigate the law of evolution. The third category is the talent of governance, which can be engaged in the political system. The fourth category is the talent of learning, which can be engaged in the academic research. The fifth category is the talent of the military strategies, which can be used to command the army. The sixth category is the talent of the agriculture, which can guide the farmers for cultivation. The seventh category is the talent of the crafting, which can be used to produce tools. The eighth category is the talent of business, which can be used to revitalize the national economy. The ninth category is the eloquence, which can be used for political debate. “Fu Zi”, Fu Xuan

There are some cases where both the leader and the leadership team are excellent. One typical case is the “project team” of Mao Zedong, Zhou Enlai and Zhu De. Mao Zedong’s talent in military command, political strategy and strategic vision are well recognized. Similarly, each member of the leadership is excellent in certain aspects. These include: Zhou Enlai’s dedication, attentiveness, charisma and superb political ability; Zhu De’s influence in the military; and the military, political, and logistical capabilities of the top ten generals. Even so, it is not necessarily appropriate if Mao Zedong is responsible for intelligence, Zhou Enlai is responsible for military strategy, and Zhu De is responsible for diplomacy. Zhuge Liang’s team is a typical example of excellent project manager yet weak leadership team. There are a lot of similarities between Liu Bei and Liu Bang. He also had a leadership group. Zhuge Liang was responsible for strategies and logistics. Liu Bei, Guan Yu and Zhang Fei were responsible for military actions. As a result, Liu Bei was the first to become the emperor in the three Kingdoms. Zhuge Liang’s talent is outstanding, and he becomes a representation for wisdom. However, there was no commendable leadership team when Zhuge Liang was in charge following Liu Bei’s passing away. This is arguable because Zhuge Liang’s ability is too strong. Shu Kingdom was the first one been finished in three kingdoms. This is not only because of the “overall trend of the world” but also “no talents in Shu Kingdom”. Zhuge Liang is not only superb in strategies, but also diligent and dedicated. However, his ability to know others and assign tasks is not comparable to Liu Bei, Sun Quan and Cao Cao. On the other hand, as Zhuge Liang is too talented, it is difficult for others to cooperate with him and to have a sense of accomplishment. In addition, it is very difficult for Zhuge Liang to trust others. This presents significant challenge for such a team to work together. Mao Zedong himself repeatedly opposed personal worship. At the Second Plenary Session of the Seventh Central Committee of the Communist Party of China, he put forward the rule of “not allowed to celebrate the party leader’s birthday; not allowed to use the name of the party leader as the name of the place, the name of the street, and the name of the company.” Furthermore, in September 1956, the party constitution amended by the Eighth Congress of the Communist Party of China proposed to remove the expression of “Mao Zedong Thought”. In the second plenary session of the Seventh Central Committee, Mao Zedong put forward “Working Mechanisms of the Party Committee” in order to regulate the democratic centralism of the Party Committee. This is included in the fourth volume of the Selected Works of Mao Zedong published in 1960. Despite this,

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personal worship was formed, which results in significant lost to the Chinese people. This indicates the risks associated with having outstanding people as leaders. The managerial skills and professional skills of the project manager are not as important as his/her ability to improve the team cohesion and professional ethics. It is well recognized that it is difficult to achieve goals without talents. However, in terms of employing people, the most suitable is the best. In this context, the “most suitable” refers to the compatibility amongst tasks, personnel characteristics, management methods and tools. As Guan Zhong stated:” Nothing can be accomplished without norms or standards. The compass is used to correct the circumference. Although people have a good hand, it is not as good as a rough compass to correct the circumference. Therefore, a clever person can make rules, but can’t abolish the rules. The sage can make a law, but cannot rule the country by abolishing the law. Therefore, it is equivalent to abolishing the compass to correct the circumference if ruling the country against the law although there are clear wisdom and noble morality.” To form a competent team, it is crucial to have an effective communication mechanism. It is important to understand the value proposition of the project owner, the parent company and other project stakeholders in a timely manner and communicate within the project team. Similarly, it is imperative to effectively eliminate misunderstandings, to deliver tasks, work orders and other information on a timely basis during the cooperation amongst various project stakeholders. It is difficult for the project team to simply obey project manager’s instructions due to various issues such as: innovation, different knowledge areas and affiliations, and the limited power and authority. Therefore, it is critical to establish a communication mechanism within the project leadership team which is able to effectively eliminate contradictions and encourage team efforts. Such communication mechanism is featured with the harmony between democracy and centralized decision making. First, the party secretary must be good at being a “squad leader.” The relationship between the secretary and the committee is that the minority obeys the majority. Second, we must put the problem on the table. If you have a problem, you will have a meeting, put it on the table to discuss it. Stipulate a few of them, and the problem will be solved. Third, “interactive information.” The members of the party committee must inform each other and communicate with each other. This is important for achieving a common language. Fourth, we should ask the subordinates for anything we do not know and do not understand. Do not rush to express agreement or disagreement. Be a student first, then be a teacher. Don’t place the order until consulting the subordinates. This applied to all ministries except in the event of emergencies. Fifth, learn to “play the piano.” Party committees must pay close attention to the critical matters. Meanwhile, they must carry out other tasks following the priority of critical matters. Like playing the piano, every task needs to be addressed. Sixth, we must “tighten up”. In other words, the party committee must not only “catch” problems, but also fully commit to the critical matters. Seventh, pay attention to quantities. This means that there must be a fundamental quantitative analysis of all issues.

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5 Integrating Productive Forces and Relations of Production Eighth, all meetings should be notified in advance. Everyone should be informed what problems to be discussed, what problems to be solved so that proper preparation could be made. No preparation, no meetings. Ninth, be concise. Speeches, articles and resolutions should be concise. Don’t have long meetings. Tenth, pay attention to uniting those comrades who have different opinions. We must be good at uniting not only comrades with the same views, but also those with different opinions. Eleventh, avoid arrogance. This is a principle of leadership and plays a critical role in maintaining unity. ——Excerpt from Mao Zedong’s “Working Mechanisms of the Party Committee”

The project leadership team is not static after the project was initiated. Corresponding to the project’s life cycle, the main contradictions that the project needs to resolve will also change, so as the role of project management. Therefore, the composition and management mechanism of the project leadership team will be adjusted accordingly. There are inherent differences between people, and these differences are hard to make up. Competency depends on choice, while skills rely on training. When selecting people, more attention should be paid to the candidate’s talents and basic competencies. By contrast, the specific job skills can be developed in a short period of time through training. The internal training of enterprises is not aimed at improving staff’s competency. Rather, problem-oriented training programs should be adopted, especially in those projects with specific deadlines. The more experienced a person is, the harder it is to learn new things. This kind of “experienced staff” should receive more training on team building so that they can focus more on what they are good at. This is exactly the reason of “it is not appropriate that capable staff is appointed to multiple posts” as Guanzi pointed out.

Leon Pretorius, South Africa, Professor, Graduate School of Technology Management, University of Pretoria, Honorary Fellow of SAIMechE

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As background to some of these chapter comments it also needs to be said that I observed in the past six years, that I had the privilege to be a visiting professor at School of Management in Shandong University, an encouraging focus on a systems approach to project management research especially as conducted by some Ph.D. students. To continue; value can be created using projects. One type of value can be in the form of products; another in the form of services. These types of value are generally important for stakeholders. A relationship between projects and stakeholders thus follows implicitly. Stakeholders are present in a multitude of forms. These stakeholders as influencing or influenced by projects are for example clients or customers and also the parent organisation of the project in many instances. It is therefore implicit that a special relationship exists between the project and the parent organisation. As discussed in quite some depth in this extraordinarily informative book, this special exchange between host organisation and project can be characterised by a symbiotic Yin-Yang context. A very important example of such a symbiotic relationship is the life cycle that a Ph.D. research project and Ph.D. student in Project Management may display in a University. These three: research project, student and university co-exist for mutual and even the greater benefit of society at large. This Yin-Yang interplay between organisation and project can be likened to the Systems Thinking approach. Some proponents of Systems Thinking in the recent decades include important researchers and practitioners such as Senge, Forrester, Sterman, Meadows and many others. Project management researchers often also refer to the tensions that exist between client satisfaction and project success in relation to Yin and Yang. This then brings us back to the concept of value created by projects. One common theme in these systems thinkers’ world view is that they not only focused on an event oriented approach when addressing complex situations such as projects but importantly also included a feedback loop approach in their thinking style. This often nonlinear feedback relationship thinking can also be very usefully employed in our view of the project in the organisation. This nonlinear feedback relationship between project, organisation and environment is often also characterised by a culture element. This can imply a focus on project, organisation and even regional cultures and the interplay between these. Project management is therefore also embedded within a cultural context again providing for a symbiotic tension between project and the organisation where it may be creating value. Value of its own may display a cultural dimension: What is considered value in one cultural context may not constitute value in another context. The influence of cultures on projects and project management is evident where for example East meets West in the global arena. This is then where a Systems Thinking approach including a Yin-Yang methodology may be very helpful in determining success for projects.

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It is foreseen that a book such as this with a Yin-Yang focus in combination with Systems Thinking to project management may be beneficial. The benefits are deemed to be both to the project management practitioners and researchers alike. An important element not to underestimate in this book is that a more holistic view including the Yin-Yang context is taken again on this important field of endeavour. The book can also provide good starting points for further research and thinking styles in project management to create value through projects.

Chapter 6

The Harmony in Diversity for the Integration of Project Resources

What has a (positive) existence serves for profitable adaptation, and what has not that for (actual) usefulness. Chapter 11 of Tao Te Ching

Resources refer to everything we can use rather than what we have, both tangible and intangible. During the process of integrating project resources, it is also necessary to consider that the resources are associated with project stakeholders. It is crucial to effectively address the contradictions between various stakeholders for the effective integration of resources. These contradictions include the Yin-Yang unity of opposites relationship between technical personnel and administrative personnel, the Yin-Yang unity of opposites between formal and informal organizations, and the Yin-Yang unity of opposites relationship between tangible assets and intangible assets.

Matching Administrative Talents with Scientific and Technological Talents in the Project Among all the project resources, talent is the most critical and the most complicated. “People-oriented“ and “respect for talents” are common phrases used by Chinese people. The chefs in Chinese restaurants, the bosses in enterprises, and professors in universities have always been regarded as the most crucial element in these organizations. On the one hand, due to their level of importance, the senior management has great concerns to the consequences of their departure from the organization. On the other hand, it is very common that these talents are aware of their importance to the organization, and therefore seize every opportunity to negotiate with the organization for better deals. These two issues will lead to the contradictions, i.e. seeming to respect talents but actually taking precautions against talents. Whether or not a person is a talent is relative to whether he/she can solve the main contradiction of an individual or an organization. Therefore, the judgment criteria of talents vary according to contradictions. Without an understanding of this, © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_6

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many people perceived that they are so talented yet did not attract any interests. Furthermore, it is a curse if someone keeps perceiving he/she is a talent without understanding of the changes to the contradictions. Fan Yu then left the king of the Yue and sent a letter to Zhong from Qi State. It was written in the letter: “All birds have been hunt down so all good bows will not be useful anymore. Dogs will not be useful anymore when all rabbits have been hunted down. The king is a long-necked beak. He only shares difficulties rather than happiness. Why don’t you leave?” After reading the letter, Zhong claimed that he is sick and cannot serve the post anymore. Some people set Zhong up saying he is trying to rebel. The king of Yue rewarded Zhong with a sword saying: “You taught me seven strategies to attack Wu State. I only used three to defeat Wu. Four other strategies remain. Try those four strategies in front of my father.” So Zhong committed suicide. Records of the Grand Historian: Yue Wang Gou Jian Family

If talent is the productivity of the project, the way to use talent, especially the organizational mechanism is the relations of production. It is well recognized that productivity and production relations are mutually influential and interactive. Social development is facilitated via the process of solving contradictions between productivity and relations of production. It is a spiral development process between productivity and relations of production. They affect and facilitate each other. Indeed, the relationship between productivity and relations of production is the unity of opposite (i.e. Yin and Yang dialectical relationship). In organization development, such a dialectical relationship is specifically manifested in the relationship between “rule by individuals” and “rule by law”. “Rule by individuals” plays a critical role in the traditional Chinese management system. Even in the current era, the importance and dependence of various organizations on talents, especially outstanding or special talents, are still increasing. More than two thousand years ago, Guanzi proposed a people-oriented thinking.1 It was stated in “The Art of War”2 : “He, who has military capacity and is not interfered with by the sovereign, will win.” At the National Talent Conference in 2010, Hu Jintao, then General Secretary of the CPC Central Committee, put forward the argument that “talent resources are the most important resources”. He further clarified the importance of talents in the new era for the socio-economic development of China. Human behavior is affected by two factors: (1) his/her own situation, such as physical condition, skills, physiological needs; (2) the organizational environment or the social environment, such as colleagues relationships, performance evaluation methods, promotion channels. The first factor should be fully considered when selecting people whereas the second factor requires the change to the organizational mechanism of the enterprise. It is the unity of opposites between “setting up things because of people” and “setting up people because of things”. However, the meanings of “things” and “people” in these two statements are inconsistent and cannot be used interchangeably. In “setting up things because of people”, the “things” mainly refer to those need to be 1 The

Ideas of Establishing One of the Most Powerful States, GuanZi. by Stratagem, The Art of War.

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decided and innovations, and “people” refers to leading figures, decision makers and leaders. These are very few of such people and things in the organization. In fact, they are representatives of the project productivity. The organizational management of the project mainly focuses on “people” and “things” in “setting up people because of things”, that is, the “people” and “things” at the execution level. In other words, “setting up people because of things” is the main approach adopted in the organizational design of projects. The relations of production of project are used to facilitate or replace the productivity of the project. There is a traditional Chinese saying, “those with capability will do more work”. A competent person will be even busier because he/she is on demand. Competent people, especially those with special skills and are few, will be regarded by many companies or projects as treasures. However, this is exactly the reason the project is vulnerable to those competent persons. There are a number of uncertainties associated with a project due to its uniqueness. As there are small number of competent persons, they will play an important role in multiple projects. Once a project requires more time from a competent person because of changes to the original plan, other projects will suffer. If the competent person was made available from one project temporarily, this competent person might be taken away by other projects. It is likely this competent person will be not be returned to the original project if needed. In addition, competent persons often have some specific weaknesses, which may be detrimental to the entire team. The key to adopting the concept of “setting up people because of things” in project’s organizational development is to prevent the occurrence of two problems. The first one is to prevent people from adding unnecessary and even harmful work in order to show their importance. A number of phenomena exist in human being’s inferiority. These include: (1) “It is not necessary that more work could be done with more people. Rather, it often generates more works”; (2) “positive absenteeism” that is superficially busy but actually produces very little; and (3) competing for limited resources for personal and local interests, i.e. “the crying child will get milk”. The second one is to prevent the improvement of local efficiency on the cost of the overall benefit. It is very common that an enterprise has to undertake multiple projects at the same time. However, when one department undertakes multiple projects at the same time, other departments will assign priorities according to their respective local goals. This will lead to a delay of the overall project objectives or inefficiency. Professional habits vary according to categories of people who have different logics. Among the talents related to the project, there are two types of talents that warrant special attention. The first one is administrative talents; and the other one is scientific and technological talents. These two types of talents are critical to the project and even to the business and region. Because these two types of talents have their own characteristics, the way to make most of their value is very different. Administrative talents are accustomed to the administrative system, while scientific and technological talents respect the truth. The administrative system maintains its basic order according to the level of power (ranks). A qualified administrative talent must maintain the order of the system. To maintain this order, they often need to sacrifice the local interests or even local justice. Instead of simply judging a policy

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by “right” or “wrong”, they use “whether it is effective” as the criterion of judgment. They live in a real world, not expecting perfection. They often weigh in “should or should not do it” and “the lesser of two evils”. If necessary, they will bear humiliation, and this approach is often questioned by others. For scientific and technological talents, their mission and value are breakthroughs of the status quo and questioning the authority. They live in an ideal world, pursuing perfection. Their standard of judgment is either “right” or “wrong”. Wu Qi attacked Zhongshan. One soldier was wounded. Wu Qi helped to suck their pus out. The mother of the wounded soldier cried. She was asked: “The general likes your son as his own child. Why are you crying?” She replied: “Wu Qi sucked my husband’s pus out who has died from the battle. Now it is my son’s turn, that is the reason I am crying.” “Shuo Yuan·Fu En” by Liu Xiang The lower class people call integrity as morally noble. The leaders often call charming and compliant as loyalty. The honest people do not know how to be flattering while leaders will doubt their loyalty. The flattering people cannot maintain integrity so they will be abandoned by the lower class people. “Rong Ku Jian” by Feng Dao

An enterprise cannot gain sustained development without interaction with administrative talents. If the enterprise is too far away from the real-power administrative talents, the administrative talents will be left out because of the lack of direct value from them. The consequence is that it is difficult for the enterprise to have the priority to access political profits. If the enterprises are too close to the real-power administrative talents, it is hard to distinguish between officials and businessmen. The enterprise is then vulnerable to administrative talents’ rising or falling. Zhong Yong oriented approach could be used to deal with the relationship between administrative talents and businessmen which is a unity of opposites. In this approach, the relationship between the administrative talents and businessmen becomes the relationship between the government and the enterprise; and the secret ties between the administrative talents and businessmen become public ties between the government and the enterprise. This has turned the conspiracy into a strategy. The relationship between administrative talents and businessmen refers to the personal relationship between administrative talents and businessmen. The relationship between government and enterprise is the public interest relationship between governmental functions and enterprises. In order to pursue the public interests, any government will develop the economy and make some efforts that are closely related to enterprises. Therefore, there is a natural connection between the government and enterprises. Many and even the vast majority of administrative talents do not value economic benefits from the project. Rather, they expect some political achievements from the project. Administrative talents are also ordinary people. Even if they are more enlightened than the general public, they can also show selfishness. The most common one is that they hope to demonstrate their actions through the project success. Therefore, in order to obtain political profits, enterprises need to place focus on solving the main contradictions associated with government functions and political achievements. Similarly, the government needs to allow enterprise to gain profits in order to resolve this contradiction associated with the public interest. Otherwise it will leave

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a negative example for the future. This contradiction is oriented to the public interest. Once this contradiction of public interest is resolved, the administrative people can obtain political achievements. Consequently, their personal interests of pursuing the political achievements are also solved. This is a kind of strategy of win-win for both government and enterprises and a win-win for both government and businessmen. Administrative talents pursue political careers. By contrast, scientific and technological talents value reputation more, and pursue the authority of an “uncrowned king” who is with freedom yet being influential. There is also an inherent sense of “celebrity” in China’s scientific and technological talents. However, Chinese people have been influenced by the Confucian culture for thousands of years. The views of “A good scholar who excels in his/her discipline is relatively easier to become an official” and “everything is second to being a scholar” have profound impacts on scientific and technological talents. Therefore, many scientific and technological personnel are not willing to be bound by the administrative system, or to spend a lot of time to deal with tedious administrative matters. Despite these, they still hope to have a good professional title, and even hope to have an administrative position. Due to the different characteristics of administrative and scientific and technological talents, it is difficult for ordinary people to have merits of both types of talents. Especially in R&D projects, it is necessary to not only avoid administrative talents commanding unreasonably, but also avoid the paranoid personality of technical leaders. It is crucial to respect not only the pragmatic working style of administrative talents, but also the idealistic spirit of technical leaders. It is necessary to tolerate not only the unnecessary and overelaborate formalities of administrative talents, but also technical leaders’ behavior of “fighting over the smallest trifles”. It is an assumption that the objects of management are ordinary people rather than sage in spite of differences in intelligence, emotional intelligence, skills, physical strength and so on. Since it is not realistic to expect that an ordinary person has merits of both types of talents, the effective approach is to let them work together. The most typical case of integrating administrative talents with scientific and technological talents is the “Two bombs and one Satellite” project.3 A novel management system was developed in this project, i.e. “two lines of command”4 for technology and administration matters. The “two lines of command” were first proposed by the Fifth Research Institute of the Ministry of National Defence (hereinafter referred to as the “Fifth Institute”). On March 21, 1962, China’s first self-designed Dongfeng-2 missile failed in the first flight test. After thorough investigation, the Fifth Institute concluded that the failure is related to the 3 “Two Bombs and one Satellite” originally referred to atomic bombs, hydrogen bombs, and artificial

satellites. The atomic bombs and hydrogen bombs were later collectively called nuclear bombs, and the other “one bomb” refers to missiles developed earlier. Later, “Two Bombs and one Satellite” refer to missiles, nuclear bombs, and artificial satellites. On November 5, 1960, the first missile of China was successfully launched. At 3 pm of October 16, 1964, China’s first atomic bomb exploded successfully. As a result, China becomes the fifth country with an atomic bomb. At 8am of June 17, 1967, air-blast test of China’s first hydrogen bomb was successful undertaken. At 9 pm of April 24, 1970, China’s first artificial satellite was successfully launched. As a result, China becomes the fifth country to successfully launch satellites. 4 Successful Experience and Lessons Learnt of “Two Bombs and One Satellite” Project, Li Qidao’s blog: http://blog.sina.com.cn/s/blog_5d55fe3e0102eyer.html.

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6 The Harmony in Diversity for the Integration of Project Resources organizational management system of the entire institute as well as the overarching design. Therefore, it proposes a series of measures, including “enhancing the chief designer system, establishing the technical accountability system” and “strengthening the planning and dispatching system”, and “in strict accordance with the plan”. These aspects have been clearly defined in the subsequent “Provisional Regulations of the Fifth Research Institute of the Ministry of National Defence”. This marks the formation of the “two lines of command” for technology and administration matters. The technical command system is responsible for technical coordination, and the administrative command system is responsible for planning and coordination. These two kinds of coordination interact with each other. Planning coordination is based on technical coordination, while technical coordination is achieved through planning coordination. The administrative command system must take all kinds of measures to ensure that technical decision-making can be achieved via the technical command system. Similarly, the technical command system must make appropriate technical decisions to avoid unnecessary difficulties for the administrative command system. There is another related approach, i.e. “three-in-one”. On December 26, 1962, Nie Rongzhen delivered a speech on military production at a conference on the defense industrial system. Nie Rongzhen stated that it is necessary to implement the “three-in-one” approach of managers, workers and technicians in the factory. “Our cutting-edge technology can only rely on our own workers and experts. Managers should be good at using them, developing them politically and technically, improving them, and making most of their enthusiasm and creativity. For the entire national defense equipment, there is also “three-in-one” approach amongst use, research, and production”.5 In each factory, there are a large number of managers, workers, and technicians which are at various levels, understand different information and pay attention to different matters. The “three-in-one” approach motivates the effective communication amongst all staff which helps to promote the collaboration for achieving the ultimate goal. During the development process of “Two Bombs and One Satellite”, research institutes, production units and users often communicate with each other. This has helped to ensure that all activities can be carried out in the proper order. Such “three-in-one” organizational mechanism and working measures reflect the unique technological democracy with Chinese characteristics.

According to Guanzi, “For people governing the nation, three questions need to be addressed when using people”6 that is, “The first is if a man’s virtue is equal to his position. The second is if his achievement is equal to his salary. The third is if his ability is equal to his office. These three fundamentals are a source of to fix nation’s disorder. Therefore, if there are those in the country who have not demonstrated their virtue and righteousness to the court, they should not be given positions of honor. If there are those in the country who have not shown to the country any achievement and service, they should not be given high salaries. If there are those who, in overseeing affairs, are not trusted by the people, they should not be employed in high offices.”7 In terms of appointments and incentives, we cannot expect for perfect fit, Rather, it is a fundamental principle to place every individual in the right place according to their characteristics. In China, a dual-master system is adopted in local governments, army, universities, film production and major scientific research projects. There are CPC committee secretaries and mayors in the government, commanders and political commissars in 5 The

Nie Rongzhen Chronicles, Volume II, People’s Publishing House, 1999, p. 655. on the Nine False Steps in Establishing Policies, Guanzi. 7 “Comments on Defining the Most Important Rules “, Guanzi. 6 Comments

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the military force, CPC committee secretaries and presidents in universities, producers and directors in film production, general commanders and chief engineers in major scientific research projects. This dual-master system is a unique management system with Chinese characteristics which does not seem to conform to the “unified command principle” proposed by Henri Fayol. However, this approach has many advantages over the “unified command principle”. For example, a major research project cannot be accomplished only by technical capabilities. By contrast, it is required to integrate various professionals; to coordinate funds, facilities and equipment; and to comply with the related laws and regulations. However, it is not usual that top scientists are not used to dealing with inter-personnel relationships or to communicating with the administrative department. They often do not have good understanding of financial regulations and the market. Therefore, inputs from the administrative supervisor are required to make proper arrangements. In the case of conflicts between resources and technical plans, it is necessary to adopt a democratic centralism and solve them through meetings.

Integration of Formal and Informal Organizations In China’s organizational mechanism, it is very common and important that formal organizations and informal organizations coexist. Both explicit rules and inexplicit rules are important. Similarly, the coexistence of “rule by individuals” and “rule by law” plays a crucial role to ensure the effective operation of project organizations. There are many classic statements in the traditional Chinese wisdom of the country governance to emphasize the importance of both ruling mechanisms. For example, Confucius believes that “Therefore the administration of government lies in getting proper men,”8 “Let there be the men and the government will flourish; but without the men, their government decays and ceases”, “When a king’s personal conduct is correct, his government is effective without the issuing of orders. If his personal conduct is not correct, he may issue orders, but the orders will not be followed.” Most of viewpoints emphasizing the “rule by individuals” is based on the hypothesis of Mencius “everyone is born good”. Indeed, “ rule by individuals” is also “rule by virtue” to some extent. In the history of China, “rule by individuals” has led to not only the rising but also falling of the Zhou Dynasty. In addition, Guanzi stated that “The so-called law is to regulate the various behaviors of the society, so as to defend whether it is right or wrong. This is the fundamental guarantee for the survival and prosperity of the people.”9 Most of the viewpoints emphasizing the “rule by law” are based on the hypothesis of “evil nature of human beings” proposed by Xunzi. To some extent, the “rule by law” is the “The great kindness is not benevolent in the eyes of ordinary people” argued by Shang Yang. The history of China has witnessed not

8 See 9 On

the Analects. Prohibitions and Storage, Guanzi.

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only the success of Qin Dynasty by ruling the entire country but also the short-live of the Qin Dynasty due to the “strictly ruling by law” initiated by Shang Yang.10 “The dialectic relation between the Yin and Yang operations is simply the fundamental principle of Dao”. “Rule by individuals” and “rule by law” are not opposite in most of the Chinese history. Most of famous governors in the Chinese history have used both ruling mechanisms. If the “rule by law” is the rigid aspect of organizational management, “rule by individuals” is the flexible aspect of organizational management. Especially for projects with uniqueness and uncertainty, rigidity and flexibility are the fundamental principles that project managers must master. Because of its unique characteristics, the project has relatively high uncertainty. It is difficult to determine the following matters precisely in advance: what kind of works will be completed in the project, specific contents of these tasks, and the boundary of responsibility between them. Therefore, it is difficult to achieve effective results based on commercial contracts and commitments on the paper. During the project process, it is necessary to rely on human feelings to generate certain compromises and dedications. This cannot be achieved without “rule by individuals”. Chinese also talk about the rule of law, but there is also the saying that “the law is no more than inter-personal relationship.” In daily work, there is a potential priority relationship between “emotion”, “rationality” and “law”. “The law does not blame the public” provides a potential condition for “rule by individuals” to win over the “rule by law”. It is a common approach to maintain a balance between “setting things because of people” setting people because of things” by means of “specific analysis for specific issues”. “Taiji” is a common management tool. The main contradiction in the process of establishing project organization lies between the “rule by individuals” and “rule by law”. Generally speaking, “rule by law” is more effective when the project tasks are relatively clearly defined, the boundary between tasks is relatively clear, and the quality standard of the deliverables is relatively easy to be digitized. On the contrary, “rule by individuals” is more appropriate when the project tasks are relatively vaguely defined, the tasks are highly interlaced and the quality standards of deliverables are difficult to be quantified. Nevertheless, the absolute “rule by individuals” or “rule by law” should be avoided in any kind of organizational mechanism. As stated in Analects: “if the naming is not correct or proper, it will cause invalid arguments, and then it will cause unsmooth action or behavior.” Confucian culture has long been respected by people (especially the rulers) because it is imposing. The thoughts of Zeng Guofan in the late Qing Dynasty experienced a transition from Cheng Zhu to Shen Han to Huang Lao. That is, from the study of the literature to the study of Cheng Zhu, and then from the study of Cheng Zhuzhi to the study of Shen Han, i.e. Taoism. And at last from the study of Shen Han to the study of Huang Lao, i.e. Legalism. Zeng Guofan’s experience suggests that it is first necessary to establish a reason for the stakeholders to accept, recognize and even be excited so that things can be done. This is the “Taoism”. However, it is not enough to rely solely on the “Taoism”. It is also necessary to establish rules of the game that are strictly adhered to. It is impossible for rules to be perfect due to potential changes. Similarly, the rules 10 Shang

Yang (about 395 BC–338 BC), a politician and thinker in the Warring States period. He is a representative of the early-Qin legalists.

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should not be too rigid. This is especially the case for projects that are full of uncertainties. Therefore, it is necessary to adopt the “limited degrees of freedom within strict principles”. Principles could be negotiated during special circumstances, using the flexible approaches advocated by Taoism. Shi Tao11 stated: “ No matter what you do, if you have principles have had flexibility. If you have regulations, you must have flexible changes.” This also reflects the dialectical logic. “Initiating the masses” and “establishing a united front” are two ways for the Chinese, especially the Chinese Communist Party, to excel in their integration of resources. This is also a Zhong Yong approach that combines formal and informal organizations, rule by individuals and rule by law. “Initiating the masses” refers to the integration of various resources of society. These resources are non-professional. However, they can play a role that formal organizations and professional resources cannot play due to their large quantity and low cost. This is compounded by the coordination between formal and informal organizations, between material incentives and emotional influences. “Building a united front”12 is especially suitable for projects that are featured with cross-cultural and multi-stakeholder. It is also suitable for projects that are featured with conflicts between government and enterprises, between for-profit organizations and non-profit organizations, and between different parties. “Initiating the masses” has effectively solved the problem of insufficient resources in both Chinese history and today’s society, and has played a role that formal organizations cannot. Similar statements have been made in some ancient Chinese books, e.g. “by using the eyes of the people all over the world, there are no things that can’t be seen; by using the ears of the people all over the world, there is no news that can’t be heard; by using the wisdom of the people all over the world, there is no problem that cannot be understood.”13 In essence, the leader should understand how to gain support from the public. The Huaihai Campaign14 involved 5.43 million laborers; 206,000 stretchers, 880,000 vehicles, 305,000 picks, 767,000 livestock and 8,539 vessels. 960 million kilograms of food were collected of which 434 million kilograms were delivered to the front line. The ratio of the combat troops to the laborers is as high as 1:9. Indeed, the adequate logistics support provides the guarantee of victory. “Food and fodder should go ahead of troops and horses”. A large number of laborers pushed the trolley to provide the logistic support to the troops, which guaranteed the victory of the war. Therefore, General Chen Yi vividly said: “The victory of the Huaihai Campaign was pushed by laborers”. On August 20, 2015, the Beijing Police launched a special online publicity campaign with the anti-terrorism knowledge quiz as the main content through the official Weibo of “Safe Beijing” and WeChat public account of “Beijing Anti-Terrorism”. Meanwhile, a template is provided to report suspected terrorism. In addition, “Safe Beijing” launched a cartoon image of “Chaoyang people” and “Xicheng Aunt” designed by the local police staff. Since 2014, the “Chaoyang people” have been “famous” for reporting many celebrities that take drugs. In addition to the “Chaoyang people”, volunteer teams are active in all districts and counties of the city. It is understood that more than 70% of the volunteers in Xicheng District are middle or higher-aged women. In 2015 alone, Beijing’s “Xicheng Aunt” reported 72 pieces 11 Shi

Tao (1642–1708), a painter of the early Qing Dynasty. a broad sense, the “united front” refers to that various social and political forces (including classes, political parties, groups, even nations, countries, etc.) come together under certain historical conditions. The aim is to achieve common goals on the basis of common interests. In short, the united front is the union of certain social and political forces. 13 See Guanzi, Gui Guzi, Liu Yi, Taiping Yulan, Huainanzi. 14 The Huaihai Campaign is the strategic offensive campaign against the Kuomintang army centered on Xuzhou by the Chinese People’s Liberation Army (East China Field Army and the Central Plains Field Army) during the Liberation War. The battle began on November 6, 1948, and ended on January 10, 1949. 12 In

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6 The Harmony in Diversity for the Integration of Project Resources of information relating to terrorism. Since then, the “Chaoyang Masses” and “Xicheng Aunt” has become the focus of Internet users’ discussions. Police staff with skills on painting were recruited to design cartoon images for “Chaoyang people” and “Xicheng Aunt” which are promoted in the Internet. This is to encourage the masses to compete for “Chaoyang people” and “Xicheng Aunt” and to contribute to “Safe Beijing”. The Beijing Police declared that everyone can be “Chaoyang people” and “Xicheng Aunt” when cracking down on crimes. Citizen and Internet users are encouraged to pay attention to network public relations platform available in “Safe Beijing” as well as the anti-terrorism knowledge available on the “Peace Beijing” network public relations platform and the WeChat public account of “Beijing antiterrorism”. It is requested that all suspicious matters should be reported to the police in a timely manner. The Chaoyang Masses were called the “The Fifth Intelligence Agency.”15

In traditional Chinese customs, work is not completely separated from family. In the long history, critical criteria for the appointment of an official include family status and filial obedience. “Book of Rites”16 stipulates that someone has to lay down all work for three years after his/her parents passed away, i.e. “Ding You”. Specific implementation plans and rules were formulated in each dynasty with reference to this blueprint. Both plans and rules have legal and moral constraints but the latter are more effective. At present, many trade unions will select model families every year because the harmony of the family will be closely related to the productivity of the employees. For projects, especially those that are far from employees’ homes, it is crucial to maintain a close relationship between project team members and their family members. At the end of 2003, the China Railway Seventh Bureau was reorganized from the original five railway engineering companies of Zhengzhou, Wuhan, Luoyang, Ankang and Xiangfan and the former No.3 Company of the China Railway First Bureau. At the beginning of the establishment, the contract value of the enterprise was less than 2 billion yuan, the enterprise is involved in very few national strategic projects. The 10 subsidiaries and more than 11,000 employees under the jurisdiction were distributed in Henan, Shaanxi and Hubei provinces. People living in these three provinces have very different living habits and cultural heritage. In 2012, in order to avoid the phenomenon of “cultural barriers”, the China Railway Seventh Bureau conducted a thorough investigation of the overall corporate culture which was summarized, refined and integrated. As a result, a “family culture” system based on employees and vitality was developed, and officially launched in September 2013. “Family culture” is a management concept that the China Railway Seventh Bureau has summarized and refined in the process of continuous development and growth. The essence of the “Family culture” is “Unite in strength, home and everything” with the purpose of “Caring for a small family, building a good home, serving the country.” Regardless of the severity of family matters, the company leaders all helped with them hand-on. Sometimes the employer was in overseas project site and could not return when relative passed away. The company leaders made all necessary arrangements. During the national examination 15 http://news.ifeng.com/a/20150821/44481428_0.shtml. Chaoyang District is the largest district in Beijing and the new capital city. It has a nationally famous CBD, which gathers most foreign embassies in China, as well as the main venue of the 1990 Asian Games and the 2008 Olympic Games. There are high-end residential areas, golf courses and community facilities. The commercial development of Chaoyang District has always been a popular gathering place in Beijing. 16 As one of the classic works of Confucianism, Book of Rites is an important book in ancient China. The book was compiled by Dai Sheng (Xi Han Dynasty) on various ceremonial works before Qin and Han Dynasties. It consists of a total of 49 articles.

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for university entrance, the company rented vehicles to send the employees’ children to the venue. These have made employees to have a sense of belongings and to regard the company as a family. As a result, the family culture has become the spiritual driving force to promote the healthy development of the enterprise, and become a business card to display the corporate image and expand the popularity. After more than ten years of development, the annual turnover of the China Railway Seventh Bureau has increased from less than 2 billion yuan to 33 billion yuan in 2015. The new contract value of the China Railway Seventh Bureau has increased from 2.5 billion yuan to 35.8 billion yuan in 2015. The contract performance rate was 100%. The project quality pass rate is 100%. Indeed, the China Railway Seventh Bureau is experiencing rapid growth with high efficiency.

In the traditional Chinese custom, the word “unit” is rich in content. It can be a for-profit or non-profit organization, especially in formal organizations. The person in charge of the unit not only has the guidance, commanding power and responsibility for his employees, but also has considerable power and responsibility for the family and personal life of the employees. Therefore, the formal organization also implies the elements of informal organization. The boundary between formal and informal organizations is not very clear. In recent years, with the development of Internet technology and the gradual improvement of the social security system, it becomes more convenient to achieve inter-organizations cooperation, even with partners located remotely. Meanwhile, the sense of belonging and loyalty to the unit has been weakening. With the improvement on educational experience and personality awareness, “knowledge workers” become increasingly popular. It is increasingly difficult to expect the team culture, loyalty and tacit agreement in projects due to their temporary nature. This is because it takes a long period of time to develop team culture, loyalty and tacit agreement. The cost of leaving a unit is greatly reduced. The flexible and ultra-flat community seems to be replacing organizations that rely on rigid rights and obligations to operate. In this community, hierarchical relationships will be replaced by equal collaborative relationships, and everyone will rely on mutual recognition of value exchanges for cooperation. In the integration process of project resources, attention should be paid to avoid being too rigid between formal organizations and informal organizations. Rather, it is critical to adopt the “community” approach in-between formal and informal organizations to replace the traditional concept of “organization” (see Fig. 6.1). There is a strict framework of principles for the community, but there is enough equality and freedom for the community members, which is a Zhongyong oriented solution. Community members choose to join the community according to their needs, and each community provides different values and rules to attract members. Value propositions vary from one person to the other. Therefore, it is not appropriate to expect that all project stakeholders will contribute to a single goal. The project is a platform to meet the needs of stakeholders which may involve conflicts. However, this does not impede the collaboration. As Confucius remarked, “ The superior man is affable, but not adulatory.”17 It is imperative to balance the “emotion”, “rationality” and “law” in order to resolve these conflicts. We need to rely 17 See

“Zi Lu, The Analects“.

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Fig. 6.1 “Community” between formal and informal organizations

on the understanding of human nature as well as soft constraints (e.g. morality and culture) to make up for the gap between rigid laws. As Confucius remarked: “The path is not far from man. When men try to pursue a course, which is far from the common indications of consciousness, this course cannot be considered The Path.”18 These are the reflection of the doctrine of the Zhongyong.

Intangible Resources Are not Less Important Than Tangible Resources Resources are required to complete the project. However, resources are not limited to those owned by project managers, nor to tangible resources such as people, facilities, and funds. Everything that we can use to achieve the project success is our resource, no matter tangible or intangible. It is comparatively easier to understand the importance of tangible resources. However, as stated in Taiji Boxing Theory, “Yin and Yang are mutually cooperated and dependent on each other, which is the understanding of Jin.” Managers should be good at making most of both tangible and intangible resources. As the consequence, insufficient tangible resources can be solved while the benefits of tangible resources can be maximized. In Tao Te Ching, Laozi also clearly stated the relationship between the two types of resources: “what has a (positive) existence serves for profitable adaptation, and what has not that for (actual) usefulness.”19 The ability to use language is a very important asset for managers. “The efficient and effective use of language can be equal to a million soldiers. If not using well, it can ruin the country”. It is a crucial motivation method to impress people with language and reasoning, which is more effective than monetary incentives. According to the 18 See

“Chap. 13, The Doctrine of the Mean”. 11, Tao Te Ching.

19 Chapter

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unity of opposites (i.e. Yin and Yang), if one has no subordinate in the organization, they will have superiors. It is more effective to convince the superiors with language and gain support from them than to have support from subordinates. Many people have experienced “The little ghost is more difficult to deal with than Yama”. Many people feel aggrieved for this. They always think that their efforts pursuing the public interests of the company are not recognized. The reason is simply—we talk to “little ghost” where we meant to talk to “Yama”. You can talk about ideals with your boss, and you need to talk about interests with your subordinates. This is a kind of unity of opposites. Many of us hope that our subordinates have lofty ideals and they will contribute to the company. This is “to climb a tree to catch fish”. In Chinese history, counselors are very special talents. They were called “strategists” during the Spring and Autumn Period and the Warring States Period. They played a considerable role in China’s political, economic, and military decisions and social development. The role of “strategists” is to change the world by influencing decision makers. “Guiguzi” discussed the principles and strategies of many strategists, while “Warring States Policy” focuses on the cases of applying these principles and strategies. Su Qin, Zhang Yi, Zhang Liang, and Chen Pingren did not own the army themselves. However, they could call the military force to make contributions by influencing their respective monarchs. The human beings make light of material goods. You cannot entice him/her with profit, but you can make him/her spend. The brave soldier makes light of difficulties. You cannot worry him/her with fear, but you can make him/her take risks. The wise are knowledgeable about principles, they are clear in reasoning. You cannot deceive them with insincerity, but you can present them with sound reasoning and make them do things for public good. These are the three kinds of talented people. Therefore, the stupid are easily deceived, the worthless are easily intimidated, and the greedy are easily enticed. These you may cut off as the situation warrants. Therefore, strength is an accumulation of weakness. The straight is an accumulation of the crooked. A surplus is an accumulation of shortages. These are the methods of true way in action. So it is that when intimate with outside but distant with the inside, speak to the inside. When intimate with the inside and distant from the outside, speak to the outside. Therefore, transform he/she by using his/her doubts. Agree with him/her according to what he/she sees. Get him/her trust and regard by going along with what he/she says. Unite with him/her by keeping the situation. Evaluate him/her according to he/she dislikes. Repel him/her according to his/her anxieties. By probing make him/her apprehensive. Motivate him/her with exaltation. Rectify him/her with subtlety. Respond with verification, surround and block him/her up, confound and confuse him/her. This is called planning and scheming. As for the implementation of planning and scheming, public interest is not as good as private interest. Private interest is not as good as collusion, because when the collusion is tight there are no openings. What is regular is not as good as unusual, because the unusual flows without stopping. Therefore, when persuading a ruler of people one must speak with him of the unusual. When persuading a public official one must speak with him of private interests. Guiguzi: Schemes20

Credit is another very useful intangible asset. “Integrity” is the basic moral requirement for human beings in the traditional Chinese culture. However, there are two 20 Michael Robert Broschat, Guiguzi: a textual study and translation, University of Washington, 1985.

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ways of treating honesty by Chinese people as they are used to using dialectical thinking. The first approach emphasizes honesty such as “One cannot stand oneself without honesty”, “what has been said cannot be unsaid”, and “treating youngsters and old folk equally scrupulous”. The other approach is quite opposite such as “all business persons are evil”, “it is difficult to teach fools, and it works by simply deceiving”. Such contradiction can be explained by the Zhongyong strategy. “Honesty” is the heart of ourselves, that is, “never forget why you started”. “Integrity” is the commitment to promises made to others. Resources can be temporarily obtained out of thin air through credit, and this intangible asset of credit can be exchanged for tangible resources. However, such intangible assets need to be redeemed within a limited period of time, that is, to provide evidence of trustworthiness to the other party. Credit has an expiration date and it can only be used once within a certain period of time. Once credit is lost, it is difficult to let it take effects. System design can play a role in saving resources from the structure. It is easy to understand the value of such overall optimization approach. The challenge is that the overall optimality often comes at the expense of local interests. It is not appropriate to rely solely on consciousness and dedication to make people willing to adjust their behavior for the overall benefit. Instead, a Zhongyong oriented strategy should be adopted to gain their temporary concessions through “exchange”. We will never let Lei Feng and Jiao Yulu suffer, and the devotee will receive a reasonable return. “Huawei Basic Law”

Time and sense of security are two special intangible resources in the “exchange” approach advocated in the Zhongyong theory. Time is the same for everyone. No matter how efficient or effective we are with time, everyone has the same time every day. We cannot borrow time from the future or save today’s time for the future. However, the pressure or slack of time will affect our work efficiency, having positive or negative impacts on the productivity. In other words, the effective and efficient use of time can increase or reduce the effects of resources. Similarly, we will adjust the degree of cooperation because of the need for security. Meanwhile, we will reduce the demand for short-term benefits because of long-term security. This will not only reduce costs, but also encourage people to sacrifice local minor benefits in exchange for the overall major interests. In the Internet age, everyone holds a “microphone”. Therefore, public opinion is the most important resource in the project and should be used appropriately. In particular, the Internet is the main platform for acquiring and exchanging information for the new generation that was born after 1990. This also gave birth to “emotional assets” where the “fan economy” effect is formed. Presenting as a critical source of “emotional assets”, public opinions can not only influence project decisions, but also provide a catalyst for the acquisition or loss of project resources. Policy is another resource that Chinese people make good use of. For developing countries, due to the shortage of resources, it is necessary to rely on policies to guide the accumulation of resources, so as to achieve the effect of “concentrating resources to on main agenda items”. The one who has the information of the policy and who can fully exert the effectiveness of the policy will be able to gain a competitive advantage.

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For Chinese people, the biggest resources are in the hands of the government, and the policy provides the signal of how the government uses those resources. The socalled “policy dividend” is essentially the marginal benefit derived from the supply of resources and its price to enterprises or projects. PPP project is an example of the government sharing some of its monopoly resources with enterprises. Resources are required for the completion of projects. The cost of expenditure is the only resource which has been confirmed in all reserve resources. The project is temporary by nature. In the VUCA era, a large number of projects are generated in an uncertain environment. It is difficult to accurately predict when project opportunities will emerge, and consequently to reserve project resources in advance. Similarly, the uniqueness and temporary nature of the project makes it difficult for enterprises to bear the cost of owning certain resources over the long term. It presents a major challenge to the project governance to capture resource related information and to integrate all resources.

Brian Cracknell, Malaysia, Director of Language Works, 2013 IPMA Otto Zieglmeier Achievement Award winner

Continuous learning about China has been a feature of my adult life—from studying History at university in the UK to interacting and collaborating with Chinese colleagues, project team members and clients from the 1990s till today. This chapter reveals much about the first thing I learned—the Yin-Yang unity of opposites relationship. “Rule by law” and “rule by individuals” are not opposites in the Chinese scheme of things. In fact, the basic principle of Tao is the dialectic relation between Yin and Yang. As regards project management, the Yin-Yang principle is evident in the relationship between administrative and technical people. With the dependence of organisations on skilled people still increasing, talent is the most vital but also the most complex project resource. This means respecting talents while also taking precautions against any negative impacts from them. This perhaps symbolises more than anything the dialectical relationship between “rule by individuals” and “rule by law” that runs throughout this chapter.

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The dialectical logic is also seen in flexible approaches advocated by Taoism, together with limited degrees of freedom within strict principles. Project organisational design in China mainly adopts the approach of “setting up people because of things” to prevent unnecessary or harmful work and to prevent only local efficiency improvement. It is vital to respect the working style of administrative talents but also the idealistic spirit of technical ones. Let them work together, but place individuals in the right place according to their characteristics. Another Chinese tradition is to not completely separate work from family. Family harmony is believed to be linked to employee productivity. It is thus necessary to maintain good relations between the members of a project team and their families. Furthermore, in connection with this, persons in charge not only guide and command and have responsibility for employees, but also their family and personal life. In the Chinese set-up it is therefore normal to adopt the ‘community’ approach in between the formal and informal organisation. Although a strict framework of principles exists for the community, The Yin-Yang can also be found in the relationship between formal and informal organisations, as well as between tangible and intangible assets. Managers must master both core principles of rigidity and flexibility in order to deal with the uncertainty inherent in most projects nowadays. In the Chinese project view, everything that can be used to achieve project success is deemed a resource, whether it be tangible or intangible. Project managers must optimise both. In this view, time, sense of security, policy and public opinion can be seen as resources. In the West, it can be said that the essential link between language and leadership is just beginning to emerge. Certainly, in Chinese projects, the ability to use language and reasoning is an important asset for managers: talk about ideals with the boss, and about interests with subordinates. In traditional Chinese culture, integrity is a basic human moral requirement, as it is elsewhere in the world. But the system of dialectical thinking means there is honesty (which is to always remember why you started), and integrity (which is to commit to promises you make to others). Encouraging people to sacrifice local, minor benefits in exchange for overall major interests is different from Western thinking of individual rights and self-actualisation. In an increasingly volatile, uncertain, complex and ambiguous (VUCA) project environment, we will face challenges as project managers to gather resource-related information and to integrate resources for beneficial outcomes. An understanding of China’s unique dual-master system is an important addition to the project manager’s toolbox.

Chapter 7

An Appropriate Use of Empowerment and Incentives

Kindly yet awe-inspiring, the way of the king will be complete. If the king does not give pleasure to the people, they will not grieve for him. If he does not let them live, they will not die for him. Guanzi: The Situation

Management needs should be planned ahead of the problem. The project forms an integral part of project governance. If there is no control over the project, it is not realistic to simply expect positive surprises. Control is not a one-time activity. Rather, it is throughout the life cycle of the project. Managers should avoid using term of “surprise” and replace it with “controllable”. The consequences of pursuing “surprise” are often “shock” or “astonishment.” Very few people want to be managed or changed. In the process of project management and control, it is necessary to deal with the unity of opposite relationship (i.e. Yin and Yang) such as: between pre-event prevention and post-event reward/punishment; between collecting data and analyzing information, between adhering to principles and being flexible.

From Project Performance Appraisal to Project Performance Management Confucius has a famous saying: “If a man takes no thought about what is distant, he will find sorrow near at hand.”1 In other words, if we do not have a long-term plan, there will inevitably be problems in the future. Due to the uniqueness of its deliverables and the dynamic nature of resources, the project will inevitably be associated with a large number of risks. To some extent, project management is risk management, and project governance is risk governance. In China’s long history, the nonlinear relationship between system consciousness and the systems has always been valued by people. The idea of Chinese traditional medicine is to regard the human body as a system. In addition, such a system forms 1 See

“The Analects. Wei Ling Gong”.

© China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_7

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a part of a larger social system and even a natural system. Therefore, the Chinese traditional medicine pays attention to the “harmony between human and nature” and to adopt different ways of keeping health according to the seasons. At the same time, the human body system can be divided into various subsystems. The adjustment of each subsystem can affect the whole human body system. The massage and acupuncture methods of the Chinese traditional medicine are based on this understanding. In the Chinese traditional medicine, it is ridiculous to simply attend to where the patient felt painful. This system-based thinking can be applied in project governance to locate the major contradictions and their main components. The purpose is to shift the paradigm from the post-event project performance appraisal to post-event project performance management. Bian Que visited Duke Huan of Cai. After standing around for some time, Bian Que said: “My lord has a disease which lies in the pores of his skin. If it is not treated, I fear it will spread deeper.” “I am not sick,” replied Duke Huan. Bian Que departed and Duke Huan remarked: “Physicians love to take credit for curing people who are not sick!” Ten days later, Bian Que again had an audience and said: “My lord’s disease has spread to the flesh and skin. If it is not treated, it will spread still deeper.” Duke Huan did not respond. BianQue left. The Duke of Huan was displeased again. Ten days later, Bian Que had another audience with the duke and said: “My lord’s disease has spread to the intestines and stomach. If it is not treated, it will go still deeper.” Again, Duke Huan did not respond. Bian Que left and once again Duke Huan was displeased. Ten days later, gazing from afar at Duke Huan, Bian Que retreated and ran away. Consequently, the duke sent someone to inquire about [his behavior]. Bian Que explained: “When the disease lies in the pores, it can be treated with hot poultices. When the disease lies in the flesh and skin it can be treated with metal or stone needles. When the disease lies in the intestines and stomach, it can be treated with well-boiled medicines. But when the disease lies in the marrow of the bones, what can even the likes of the Commissioner of Life do about it? Presently the disease lies in the bone marrow. For this reason, your servant has no more advice to give.” Five days later, Duke Huan fell ill. He sent someone to look for Bian Que, but he had already fled to the state of Qin. Duke Huan subsequently died. Han Feizi2 Chapter 20

There is a paradox to be resolved in the process of project supervision and management. If the process is well controlled, the risk will not actually be generated. How can the value of supervision and management be proved without the actual occurrence of the risk? Similar to the problem presented to Bian Que’s eldest brother, how can you prove that Bian Que is most competent in the medical knowledge and skills? As stated in the Tao Te Ching,3 “The people of the state do not know that there are the rulers and governor in the first-class political structure; in the secondary class, people love them and praise them; in the third class, people fear them; in the 2 Han Fei: born in 281 BC and died in 233 BC in the Han State (now Xinzheng of Henan Province) at

the end of the Warring States period. Han Fei is a famous philosopher, thinker, political commentator and essayist in ancient China. He is a master of legalism. He is called “Han Zi” or “Han Feizi“ in later generations. 3 See The Tao Te Ching. Chapter 17.

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lowest class, people despise and hate them. The governor has not good faith is the basic reason why people do not trust in them. In the first-class political structure, the governor gets along with people easily and never issue orders inconsiderately. but the national affairs are all in perfect order at the same time. the people all said, ‘we are as we are, of ourselves!’” In such circumstance, how can we measure the value of the supervisor? To resolve these contradictions, it is necessary to clarify the value of supervision and management. Consequently, the value of supervisors can be measured. There are three fundamental values of project performance management. The first one is to improve the relations of production through the evaluation of the way of working in the project. The second one is to improve the project productivity through the evaluation of the project stakeholders’ ability. The third one is to evaluate the project outputs and provide stakeholders corresponding rewards and punishments as a compensation to the underperformance of the first two values (see Fig. 7.1). The former two values are positive, the essence of which is empowerment, i.e. helping stakeholders to improve their ability to achieve their goals. The last value is negative, the essence of which is to compensate for the shortcomings of the former two values through rewards and punishments. For project regulators, the value is mainly reflected in the first two aspects.

Fig. 7.1 Fundamental value of performance management

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In many enterprises, there are a large number of items in the management system. Some enterprises even set up departments dedicated to developing systems. There are a number of issues associated with this approach, i.e. developing systems for the sake of systems. For instance, it can lead to a phenomenon that no one can remember systems because there are too many of them and often there are contradictions between the systems. Similarly, it can lead to an inappropriate culture where employees pretend to be busy yet there are very few outputs. There are two criteria to determine whether a management system is necessary. These two criteria are: the potential to improve efficiency and the potential to reduce risks. Systems that neither improve efficiency nor reduce risk should be eliminated in a timely manner. Correspondingly, the work of the supervisor is valuable if he/she can prove that the adopted management system met those two criteria, and vice versa. The comprehensive scoring method is one of common assessment approaches. In such approach, a number of indicators are set, and each indicator is weighted according to its importance. The final performance score is the sum of the scores of the indicators multiplied by their respective weights (see Table 7.1). An assumption of the comprehensive scoring method is that the evaluation indicators can be replaced by each other according to their weights. However, such assumption is not necessarily correct. For instance, there are mainly two tasks for the procurement department of an air-conditioner manufacturer: to purchase raw materials and parts for the production department, and to purchase components for the R&D department. The amount of purchases in the production department is massive which reaches several billion each year. By contrast, amount of purchases in the R&D department is relatively small, which is tens of millions per year. As a result, the weights assigned to the procurement department’s performance indicators were: 80% for the services to the production department and 10% for the service to the R&D department. In one summer season, the weather was particularly hot. Due to a large demand from the air conditioner market, the compressors were out of stock. In order to obtain a higher performance score, the procurement department sent all staff to purchase the compressors so that no one specifically followed up with procurement needs of the R&D department. Following this kind of performance evaluation method, R&D project’s on-time completion rate is as low as 30% in this company. However, in appropriate assessment accounts for 40% of the delay in these projects.

The story of “Bian Que visited Duke Huan of Cai” shows the importance of process supervision. Bian Que repeatedly said to Duke Huan of Cai that he was ill, “if it is not treated, it will spread still deeper”. However, Duke Huan of Cai did not realize the importance of Bian Que’s advice. Rather, he was displeased and thought that “Physicians love to take credit for curing people who are not sick”. As a result, he died in the end. The focus of performance management is on the prevention of project risks. It is not appropriate for management personnel to have an attitude of Table 7.1 Comprehensive performance evaluation method (Illustrations) Description of each indicator

Score to each individual indicator

Weighting

1

A

a%

2

B

b%

3

C

c%

4

D

d%

Performance score = A × a% + B × b% + C × c% + D × d%

Performance score

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“the only thing I want is the result, and it is your responsibility to work out methods”. This is because the ultimate goal of the project is to satisfy stakeholders’ needs. If one stakeholder’s problem led to the failure of the entire project, it is not possible to make up the losses even this stakeholder is severely punished. It is not appropriate to find a person to be responsible for the project and then completely assign all project responsibilities to this person. Risk management is one of most critical components of project performance management. Risk does not only refer to the uncertainty associated with the occurrence of an event. Indeed, the existence of uncertainty is very common. It is not a risk unless we need to manage and make changes accordingly. Otherwise, those uncertain things are simply the external environment we are dealing with. We are not responsible for the changes to the external environment and actually it is difficult for us to bear these responsibilities. Therefore, any project risk can ultimately be attributed to some people, or to their behavior. The factors that result in uncertain behavior of project stakeholders can be classified into two categories. The first category covers those factors that are only related to an individual stakeholder. This kind of factors varies from one person to the other, therefore can be called attribute risks. The second category covers factors that are related to social attributes. These factors are constrained by the social network that consists of stakeholders’ governance roles, therefore can be called structural risks. Structural risk refers specifically to risks derived from the impact of uncertain external influences, the degree of influence and the degree of manageability on the fulfillment of governance responsibilities. As supplements to attribute risks, Structural risks’ essence is the various uncertainties affecting the stability of network relationships. There are two types of structural risks: (1) the reliability and validity of stakeholder’s role from his/her own perspective, i.e. relationship risks; (2) the reliability and effectiveness of the overall social network that consists of stakeholders’ governance roles, i.e. network risks.4 The way to reduce the attribute risks is to choose the right people, and the way to reduce the structural risks is to establish an effective stakeholder governance mechanism. Attribute risks are internal and fundamental whereas structural risks are external and conditional. External factors show effects through internal factors. Project governance risk mainly refers to “the probability, degree of influence and manageability of the uncertain behavior of project stakeholders” (see Fig. 7.2). The focus of risk research in project governance is the project stakeholders’ behavior, interrelationships amongst stakeholder’s behavior and their uncertain impacts on the project. This is also the focus of supervision and management in project governance. At present, it is a common approach that researchers consider risk as “uncertainty of events” where all risk factors are classified and analyzed accordingly. However, this approach does not fully consider the impact of stakeholder behavior on the project goals. Similarly, the key role of “people” in risk generation was overlooked. Therefore, project risk issues were not explored according to the essence of management. 4 Liu

Xingzhi: Risk Analysis Methods via Social Networks ion Project Management, Ph.D. thesis of Shandong University, 2011, pp. 100–102.

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Fig. 7.2 Meaning of project risk

Project success relies on the performance of various stakeholders (e.g. governors, managers, and implementers) according to their duties. Having someone being responsible does not necessarily mean that he/she can or should take such responsibility. If they are uncontrollable, they cannot be managed. It is not an effective attitude that managers simply rely on the post-event rewards and punishments. Treating the project process as a black box actually places the responsibility of management on those who may not be able to afford these responsibilities. “Performance appraisal” has been a common approach in management. Many managers are accustomed to using rewards and punishments as means of motivating employees. However, there has been extensive debate on the concept of “performance”. The project is a platform to fulfill the needs of stakeholders. The stakeholders are involved because the project can fulfill their own needs. Therefore, the project “performance” cannot simply be measured by the traditional “golden triangle” (i.e. schedule, quality and cost). Similarly, it is not appropriate that the project performance is simplified as project results as the meaning of “performance” varies from one stakeholder to another. Therefore, the evaluation criteria and methods of “performance” will also vary according to stakeholders. In other words, it is not appropriate to define performance as a project outcome because project outcome is the extent to which the project stakeholders’ needs are met. Stakeholder’s needs may vary, so as their understanding of the project outcomes. Because stakeholders have different understandings of performance, a method of 360° evaluation has been proposed to reflect the fairness of evaluation, hoping to promote cooperation between stakeholders. However, this approach has limited

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effect under the influence of the Chinese traditional culture. “Befriend distant states while attacking those near”5 is a traditional diplomatic strategy in China. This is a diplomatic strategy adopted by the Qin State during the Warring States Period. It is also a means of treating people. People who are close to our own work are prone to conflicts of interest, which deserves attention. By contrast, people who are not directly related to our own work are less likely to have conflicts of interest, therefore is easier to make friends for future needs. This is a biased thought of doing things. However, in the real world, it is common to affect the interests of some people when doing things. It is not unusual that the local efficiency is affected when pursuing overall benefits. As a result, it is very likely effective workers will offend others. The evaluation performance of those who are willing to do things are not as good as those who do nothing (nice guy). The way to deal with the phenomenon of “nice guy” is that “criticisms are only to tasks rather than to individual person”. Such Zhongyong oriented approach cannot be achieved unless in the Taiji stage where unpleasant results have not yet emerged. Otherwise it will easily fall into the battle for personnel interests. Process-oriented performance management is a practice that satisfies the requirements of the Taiji stage in which stakeholders pass on responsibilities to others and struggle in personnel conflicts. It is also a concrete manifestation of “let us be the good guys and let institutions be the bad guys”.

Converting Objective Data to Information Needed for Decision Making In the era of big data, “data” are all over the world. It is an emerging challenge to identify authenticity and criticality of information. The importance of analyzing information is highlighted in Mao Zedong’s “there is no right to speak without investigation and research” and Guanzi’s “the key to using military force is understanding timing and strategy”. It is well recognized that “all problems must be viewed objectively”. However, in the field of management, it is relatively objective but definitely subjective. The so-called “objective world” is nothing more than a “objective world with subjective nature” formed by the real objective world together with the subjective interpretation of human beings. In other words, scientific conclusions are not allowed to have counterexamples, and their conclusions will remain same in spite of changes in interpretation. However, any management practices are related to people. As a consequence, there will be counter-examples, and some people will be dissatisfied. It is not appropriate to use true or false as the basis in management for decision-making. Rather, effectiveness should be the criterion of decision making. “Seeking truth from facts“ is a common phrase used by the Chinese people. However, many people have simply interpreted this as “telling the truth” without a proper understanding of its essence. “Seeking truth from facts” refers to discovering the universal laws that exist in each specific case, and then using this universal law as a hypothesis to further guide practices. 5 See

“Strategies of the Warring States. Qin Policy.”

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The challenge of “seeking truth from facts” derives from (1) cases with universal law may not be true, and (2) rules are used to guide practice without considering the particularities of internal and external factors.

During the Spring and Autumn Period and the Warring States Period (770 BC–221 BC), there were many famous strategists who gained interest and political ambitions by lobbying the monarchs. Their remarks have changed the fate of many countries and produced many famous books such as “Gui Guzi”, “War State Policy”, “Speaking Court” and so on. It is stated in the “Diamond” Sutra” of Buddhism that “All supports have actually no support.” There is a famous saying in “Dream of Red Mansions”: “Truth becomes fiction when the fiction’s true; Real becomes not-real when the unreal’s real.” Indeed, the fact itself (i.e. data) is not as important as our imagination and understanding of facts (i.e. information). In other words, facts do not exist independently. Rather, they only exist in our interpretation of facts (i.e. data). Perhaps this is the fundamental difference between management and natural science. Data are not as important as information for management decisions. However, the accumulation of data helps to generate information, and the value of information lies within the analysis of the data. The dialectical law is reflected in the transformation from data to information, i.e. from the increase of quantities to the improvement of quality. In his article “The Working Methods of the Party Committee”, Mao Zedong stated: “It is imperative to have a basic quantitative analysis of the numbers of all problems. Any quality is expressed in a certain amount. No quantity, no quality.” During the project process, due to the large number of variables, it is crucial to continuously collect data to provide effective information for decision making. However, each project is featured with different interests of the stakeholders, different professional habits and the mobility of personnel. Therefore, it is important yet difficult to ensure the truthfulness, comprehensiveness and consistency of the data. Indeed, it is necessary to collect data based on the milestones. Data should be summarized according to the standard format and analyzed according to the deviation between the actual data and planned data. In management practices, decisions without data support often fall into the trap of subjective assumptions. However, to ensure the data reflects the objective project status, it is necessary to pre-establish a structured and standardized data structure. Unified measurement tools and methods are crucial for the comparisons. According to dialectical thinking, the accumulation of quantity has to reach a certain level so that “converting the increase of quantities to the improvement of quality” can be achieved. All projects are unique. So how can we ensure that there is large-scale data with statistical analysis potential? This requires collecting data in the project milestones and collecting data in the enterprise according to the project portfolio. The process of turning data into information, although very creative, does have some patterns. “Abnormality is a demon”. After the data reaches a certain statistical trend, those samples that differ greatly from the statistical laws become the most valuable source of decision information. This is because the work that conforms to the statistical trend will continue for a while even if there is no decision. By contrast,

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those “turning points” will reverse the trend of statistical trends shortly if they are not treated on a timely basis. Such approach of information analysis is risk management oriented. Project decision makers and managers are more concerned with things outside the regular patterns, while the things following the patterns are handed over to stable functional departments for processing. This is the unity of opposites relationship (i.e. Yin and Yang) between universality and particularity. This is exactly the principle of Taiji Boxing Theory: “Stand straight like a dropping scale. Move as lively as a cartwheel. To have only one side heavy, so the other side can follow. If double heaviness occurs, then there is stagnation.” Without a stable department to master the law of stability, the project is prone to lack of reliability. Project management will be lack of effectiveness without the flexible judgment of project decision makers and managers on the unusual information. A major challenge for the supervision of project processes is to determine the authenticity of the data and information provided by stakeholders. However, the criteria of true or false for managers is quite different from those for natural scientists. The former is often based on human judgment and acceptance, while the latter tends to be independent from human judgment. The former is closed to art while the latter is science. Someone lost an axe. He suspected that his neighbor’s son had stolen it. As a result, he felt that his neighbor’s son is likely stealing the axe from the way he was walking, from his face, by listening to his words, and from his every move. Soon, he found his own axe when he dug the ravine. Then one day he saw the son of his neighbor, and he felt that his behavior, expression, and movement were not like those who had stolen the axe. The Annals of Lu Buwei

Management decisions are based on the judgment of the decision maker, which depends on the experience, knowledge, and mood of the decision maker. As stated in “Gui Guzi”, “when you see the strategy and measures of the monarch to handle things, you will know his true thoughts and intentions. What the party has done can sometimes not be in line with the meaning of the monarch because we don’t know enough about the other party’s intentions. If you don’t know much about the meaning of the monarch, even if you have taken the initiative to cater to him, you can’t get the sincere trust of the monarch from the heart. On the surface, he seems close to you but on the other side he is distant. The saints will not plan what is not in the will of the monarch.” When Zhuge Liang proposed “Lungzhong Plan”, he has to ask Liu Bei a question first—“I would like to know your ambitions”. All these statements highlight that the value of information is based on the human feelings, psychology and demands of stakeholders, rather than the “cold” objective data. As stated in “Cai Gen Tan”, “When a piece of writing reaches the acme of perfection, it is not because it contains some miraculous ingredient, but because it is written in exactly the right way.” Project stakeholders vary according to the project’s life cycle, so as the activities they involved and associated outcomes. This will result in the information asymmetry between various stakeholders. Information asymmetry between stakeholders can be detrimental to the reliability of project management, even leading to serious conflicts between stakeholders and

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in turn the project failure. Therefore, it is imperative to establish a project information disclosure system to solve the problem of information asymmetry between stakeholders and to achieve effective monitoring of project management. It is a fundamental principle to solve work conflicts by avoiding the trap of interpersonal conflicts. An effective approach “let us be the good guys and let institutions be the bad guys” is to establish a standardized mechanism for information communication. Many interpersonal conflicts derive from misunderstandings or other deficiencies in communication. This deserves special attention in projects due to their temporary nature. If there is a lack of standardized communication between stakeholders with different cultures and professional backgrounds, there will be various barriers and misunderstandings, which will convert work contradictions to interpersonal contradictions.

The purpose of project information disclosure system is to disclose the information such as the progress, cost, quality, and variations of the project to the project stakeholders. This helps to protect the interests of the stakeholders and receive the mutual supervision of the stakeholders. As a result, all stakeholders can fully understand the project status. In order to achieve effective disclosure of information related to project operation, it is imperative to strengthen the project disclosure system from the following aspects: improving the contents of information disclosure, standardizing the disclosure behavior, strengthening the accountability mechanism, and improving disclosure methods. Information disclosure should be undertaken on a timely basis. Psychologically, the lack of information often leads to negative perception, especially for things that people value. For example, if children leave school later than expected. Few parents think that good things happened to them. Most of them are suspicious, e.g. car accidents, being kept by teachers, going to Internet cafes, etc. This is the same for enterprises. When there is lack of communication on project status, stakeholders often suspect that the project is in trouble, e.g. delay to the planned schedule or lack of funds. Information disclosure is not the ultimate goal. Rather, by fully playing the role of supervision and warning through information disclosure, all project stakeholders can understand the real information associated with the project operation and effectively protect their own rights and interests. Project risks will be reduced so that project objectives are more likely to be achieved. For some public-invested projects and high-profile projects, the impact of social public opinion should be taken into consideration for the information disclosure. The public opinion can be either beneficial or detrimental to the project. Factors to be considered include: timeliness, avoiding ambiguity, distribution channels, and publisher’s identity. The timeliness, i.e. the Taiji stage of information disclosure is particularly important. Once people have formed some preconceived impressions on the project, they will conduct a biased screening of subsequent information. Once this Taiji stage is missed, it becomes extremely difficult to rectify these prejudices. An effective approach of project governance is project auditing. The essence of auditing is to determine whether the trustee works according to the agreement, that is, the comparison between “agreed items” and “actual outcomes”. Project auditing

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should not be limited to the financial aspects, because project stakeholders’ expectations are diversified. Project auditing is helpful to improve their trust and confidence in the project. The auditing consists of three dimensions: objectives, organization, and elements. This framework can guide the effective implementation of project governance auditing. This provides the guarantee and supervision for the fulfillment of roles in project governance, and strong support for project success. The objectives of auditing mainly cover the following aspects: risks, efficiency, and compliance. The auditing organization mainly includes the project governance committee, the project governance roles, and the management department affiliated by the governance roles. The auditing elements include the auditing environment, risk assessment, auditing activities, information disclosure, supervision and rectification. The ultimate goal of auditing in project governance is to guide and assist in the improvement of governance activities.6 Auditing can play a more important role in the management of project change. It is a common auditing method to conduct the departure auditing with the post change as the milestone. This is to define the responsibility boundary of the personnel with his/her predecessor. By contrast, the auditing using changes as milestones is often overlooked. In the process of project change, it is easy to “abduct” the supervisor, i.e. the desire of project change is often in favor of their own interests. In order to make a project change, it is necessary to apply to and obtain approval from the supervisor in charge of the project. The interest of the supervisor is often consistent with that of the applicant. As a result, the application for change is easily approved. This process will be reported from the bottom all the way to the top. If a senior executive agrees to the change, it is highly unlikely to reject such change request. Therefore, the approval authority for the project change must be independent. The independent change control team is required to review the rationality and necessity of the requested change. Once approval is received, configuration management is required to ensure that the relevant parties and related work are changed accordingly to ensure that the overall system achieves the new harmony. After the implementation of the change, it is necessary to review and verify the effect of the change. If the expected results are not achieved, it will be more difficult to obtain approval for similar changes in the future. If the expected results are achieved, it is necessary to consider whether or not standards or rules should be changed accordingly. This is a continuous improvement process (see Fig. 7.3). In any case, no one is willing to make a serious plan if the change process is too easy. This dialectical relationship (Yin and Yang) deserves special attention.

6 See

Ding Ronggui, Liu Xingzhi, Sun Yanan, Wang Yanwei: “Auditing Methods of Government Investment in Project Governance of Science and Technology projects”, China Soft Science, No. 5, 2009.

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Fig. 7.3 Procedures for project change management

Both Pre-event Measures and Post-event Measures Are Crucial Those who only rely on rewards and punishments are not real managers. Many managers deny that management is a discipline that requires special training to achieve positive results. This viewpoint is driven by both practical factors and theoretical factors.7 The recognition of these managers in management is primitive, that is, relying too much on the power of reward and punishment. “There must be a brave man under great reward” is a well-known incentive scheme for the Chinese people. However, high level of enthusiasm does not necessarily mean that the desired result can be achieved. There are two prerequisites for management that are easily overlooked. First, we do not have enough money and power; second, we are dealing with ordinary people. Therefore, the premise of “great reward” is often not available. In addition, due to the limited personal potential of ordinary people, it is not enough to be passionate. Motivations to participate in the project vary from one stakeholder to another. It is unusual that contradictions exist between these motivations. It is not appropriate to expect these contradictions can be solved through rewards and punishments. There are many scenarios. The planned objectives might have been achieved even before the due date, or these objectives are not achieved in the end. Even some projects are forced to be terminated. Regardless of the scenario, it is necessary to evaluate the project and draw conclusions. This provides useful references for stakeholders’ future projects. This responsibility generally falls into the project governance personnel, rather than the project manager. Before a command has been promulgated, should the people happen to act in accordance with it, and be rewarded for having observed it, that is a case of the ruler’s rewarding foolishly… If a command has not yet been promulgated and penalty is meted out, that is a case of the ruler’s cheating foolishly… After a command has been promulgated if rewards do not follow, 7 See the postscript section of Ding Ronggui’s book “Project Management: Key to Project Thinking

and Management” (Second Edition), which was published by China Electric Power Press in 2013.

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that us a case of leading the people to ignore exhortation, not to observe regulations, and be unwilling to die for principle. After a command has been promulgated and penalties do not follow, that is to teach the people disobedience. Master of Guan: Fa fa On conforming to the law

Managers should have the leadership and self-discipline, and assume the necessary risks associated with their responsibilities so the evaluation can be more effective. Many systems are ruined by the superiors themselves. The superiors expect to have sufficient initiative. As a result, they have left sufficient flexibility for themselves, e.g. not clearly specifying the evaluation criteria of the project as well as the reward and punishment standards. Sometimes they even do not comply with the procedures and rules. However, that means the risks and responsibilities are passed on to the subordinates. As a result, the subordinates will protect their own interests. There is information asymmetry between the superiors and the subordinates. The protection of own interests and the shirking responsibilities will create a culture of mutual distrust which ultimately leads to project failure. This is a vicious circle. Indeed, leaders should serve as the role model so that the reward and punishment are effective. The essence of project evaluation is the evaluation of people. This is because only people can be managed and are most difficult to be managed. What seems like the evaluation of work actually implies the evaluation of people. What seems like the management of things actually implies the management of people. The core of management is to deal with all issues associated with people. This is the true meaning of “being a good person first before doing good things.” The phrase “criticisms are only to tasks rather than to individual person” has been commonly used by Chinese people to convince those been evaluated to accept the evaluation outcomes. In fact, “(criticisms) to tasks” is Yang and “(criticism) to individual person” is Yin. “Scolding the locust while pointing at the mulberry”; “holding sand in the mouth and shooting it at a shadow”; “a deliberate act as a warning to the opponent”; “acting rashly and alerting the enemy”. The appropriate use of Yin and Yang forms integral part of innovative evaluation methods adopted by Chinese people. The project is temporary. However, all participating individuals and enterprises remain. It is a critical challenge for project governance to ensure results of the temporary project generate more additional benefits for the relatively long-term individuals and enterprises. It is a common mistake to perceive that the project evaluation is based on previous projects’ results, with a purpose of drawing a conclusion on the project success. In fact, the purpose of the project evaluation is more future oriented. Therefore, the rewards and punishments should be based on not only the previous projects’ results, but also the future needs of the project stakeholders. In other words, the project evaluation links the “yesterday”, “today” and “tomorrow” (see Fig. 7.4). The Chinese people have accumulated a lot of wisdom in this respect. There are a number of examples which reflect the idea and method of constructing the unity of opposites relationship between “pre-event measures” and “post-event measures”. Some examples are: “punish someone as a warning to others”; “sometimes misfortune is a blessing in disguise”; “to take precaution after suffering a loss”.

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Fig. 7.4 Project evaluation, rewards and punishments connect past with future

Managers often face dilemmas. This is both a challenge and an appeal of management. If a solution is superior to other solutions in all aspects, there is no need for decision-making behavior. In the stage of project evaluation, some will be rewarded and some will be punished. Making good use of rewards and punishments is the core content of management art. As Guanzi remarked: “There were always three instruments with which the former kings governed the state. They are: commands and orders, battle-axes and halberds, salaries and rewards. What about using the three instruments? They are: were it not for commands and orders there would be no means to employ one’s sub-ordinate officials. Were it not for battle-axes and halberds, there would be no means to instill awe among the masses. Were it not for salaries and rewards, there would be no means to encourage the people.” Both pre-event and post-event measures should be taken into consideration when designing reward and punishment scheme, which reflects the dialectical relationship, i.e. the unity of opposites. “People who are too kind should not be in charge of troops; people who are too loyal should not be assigned to manage finances”. “It seems people’s hearts are made of iron but they are not made of iron; it seems laws are like hot ovens and they indeed are hot ovens”. Managers should be able to show ruthlessness. The purpose of rewards and punishments is to protect the interests of majority and to facilitate the future development. Therefore, it is appropriate to employ strict measures as long as it is legal. As stated in “Military Science of Sima Rangju”, “If the capital punishment is to let more people get peace, then kill people; attacking other country is to protect our citizens, then go for the attack; if the purpose of the war is to stop the war, then go for the war.”8 This statement clearly highlighted the need to distinguish between purpose and means of doing things.

8 “Sima

Law” is one of the important military books during the Spring and Autumn Period.

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There is another dialectical relationship (Yin and Yang) to be taken care of in the project reward and punishment, i.e. the joint responsibility between the superior and sub-ordinates. Guanzi put forward an effective method for resolving the contradiction between the superior and the subordinates, that is, “the penalty is not exclusive, and the reward is not specific.” It means that the superior needs to assume the leadership responsibility for the underperformance of the subordinate. Otherwise the subordinate will not be convinced and the superior will not learn the lessons. Therefore, both superior and sub-ordinates should be punished together. The outstanding performance of superior cannot be achieved without the subordinate’s contribution. Therefore, the subordinates should be rewarded as well. Otherwise the subordinates will have no enthusiasm in the future, and the superior will have no prestige. “A gentleman will die for the patron who recognizes his value, a girl will doll herself up for the man who loves her.” In Chinese leadership art, it is necessary to use both carrot and stick. A leader will have no prestige unless he/she always cares about subordinates. It is necessary to clarify the purpose of reward and punishment, that is, “the reward is used to encourage people, the punishment is used to alert people, rewarding one person to encourage one hundred people, and punishing one person to alert the public.”9 It is stated in Sun Tzu’s “The Art of War” that “when you surround an army, leave an outlet free.” This can prevent the enemy from being desperate and fight with all they can. Similarly, there are many Chinese folks such as “anyone can make mistakes, forgive them when possible”, “the rabbit will bite people when in anxiety” and “smash a pot to pieces just because it’s cracked” which illustrate the importance of providing hope. Because of the hope for the future, we will summarize lessons learnt to avoid similar mistakes. Even if the project is over, project stakeholders still remain, and many projects will need to be completed in the future. Managers should be good at guiding subordinates to look forward. If people can see the goodness of the future, they will not despair even if they suffer great setbacks. Mao Zedong remarked that “the future is bright, and the road is tortuous.” In other words, only when people believe that the future is bright, can they persist in the tortuous path. Supervisors should have enough power to regulate the supervisees. Similarly, the supervisees generally recognize the power of the supervisors. This is the result of the Confucian education in the past millennium of the “there is government, when the king is king, and the minister is minister; when the father is father, and the son is son”. However, going beyond the limit is as bad as falling short. The difference between supervisors and supervisees lies in roles rather than the intelligence quotient. “The king is not king” will result in “the minister is not minister”. As Mencius (a representative of Confucian) said to the Duke Xuan of Qi, “when the king regards his ministers as his hands and feet, his ministers regard their king as their belly and heart; when he regards them as his dogs and horses, they regard him as another man; when he regards them as the ground or as grass, they regard him as a robber and an enemy”.

9 See

“Six strategies. Wen Strategy. Reward and Punishment”.

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The Chinese people value “to give a plum in return for a peach” and “if you respect me, I will respect you even more”. In the process of project supervision, it is necessary to determine the degree of strictness of monitoring according to the characteristics of the project and stakeholders. A certain level of flexibility could be provided to those problems that are not critical. Managers should be authorized to be flexible in decision-making process. By concentrating critical matters, the enthusiasm of project manager and project team members can be motivated. This helps to solve those problems that are difficult to solve by standard regulations due to the uniqueness of the project. In the process of supervision, it is necessary to maintain the balance between principles and flexibility. Similarly, it is crucial to provide limited freedom within the framework of strict principles. Taiji Chuan advocates “art is good for strength”. This requires immediate explosive power during the opponent’s changing from strength to weakness when they lose their balance. Chinese people believe that there must be a brave man under great reward. However, an enterprise has a limited amount of resources, so as a project. How can the incentives be maximized with the least amount of money, even without the use of money and tangible resources? The key is to grasp the timing for the change of psychological status and seize the opportunities for the transformation of the main contradictions. Similarly, the timing plays a critical role in the efficiency of project risk management and control. According to the psychology theory, poor information communication has negative psychological effects such as anxiety and suspicion. Therefore, rewards must be provided timely. There is no need to expect positive surprises after. On the contrary, punishments can sometimes be delayed to further increase the intangible psychological pressure. There is common Chinese speaking: “No fish can survive if the water is too clean, and no one can bear his company who is too critical”. This means that the contradiction should not be too idealized. “Face” is particularly valuable to the Chinese people. At the Taiji stage of various contradictions, flexibility should be given to many project monitoring. Similar concept was stated by Guanzi: “Do not be overly optimistic about something which was deemed to be successful; do not be overly trustful over promises”. “There are always countermeasures for policies” is a wisdom and a way of survival of Chinese people. “A small leak will sink a great ship.” Similarly, Guanzi believed that mistakes should be forgiven with no rationale as this may lead to even bigger mistakes. All these principles deserve consideration of managers.

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Vladimir Obradovi´c, Serbia, Editor-in-chief of European Project Management Journal, Professor at University of Belgrade, Faculty of Organizational Sciences

The success of a project is a never-ending story. The Chinese approach, which is a base for this chapter, says that a successful project is the one that makes everyone happy and is quite different from a western approach based on an iron triangle, focusing mostly on resources. Hence, the Chinese formula for project success (PS) depends on the satisfaction of the stakeholders (s): PS = f(s). This is inevitably an ultimate and absolute truth. It is difficult to imagine a project that could be called successful, while on the other side makes the majority of the stakeholders unsatisfied. However, one must take into account the fact that satisfaction is not necessarily constant over time. Historically there are numerous proofs that people were not happy with the project, but over the course of time, those projects become role model for success, i.e. Eifell tower, Sidney opera and many more. Coming from Serbian history, a significant number of projects by Nikola Tesla were considered to be unsuccessful even complete failure at the time. Nowadays results of those projects make billions of people happy and modern life would be unimaginable without them. Therefore, a project success formula should contain a variable of time (t) making it PS = f(s, t). Having in mind all previously said, one must conclude that project success is not a point in time, but rather a curve that heavily depends on people and time, which leads us to the beginning of this article: the success of a project is a never-ending story.

Chapter 8

The Unity of Opposites Between Projectization and Deprojectization

By sinking your weight on one side, you can move freely, at will. By distributing your weight on both feet, you become double-weighted and stagnant. Taiji (Taijiquan) Treatise, By Wang Zong-Yue

“A good combination of Yin (the invisible) and Yang (the visible) is called Tao.” The project is temporary by nature. However, the enterprises and individuals undertaking the project are long-term. Although the needs of projects vary, the organizational structure and functions of the enterprise are relatively stable. In a changing social environment, enterprises must be innovative in order to survive and develop. However, due to the fierce competition, sufficient efficiency and reliability is required for the enterprise operations. Important functions of project governance include solving the contradiction between these temporary and long-term, between uniqueness and stability, and between innovation and reliability. These are also the value of establishing a platform for the project governance at the enterprise level.

It Is Crucial to Develop the Project Governance Platform If uniqueness and temporary tasks are the only criteria for projects, all tasks are projects and will be managed accordingly. However, only commonality leads to efficiency. Therefore, it is imperative to weigh the difference between uniqueness and efficiency. Projectization will lead to task-oriented and result-oriented. However, there are potential issues associated with advocating projectization and “everything is a project”. The excessive worship of innovation and the blind pursuit of performance can easily lead to impetuous emotions, so that everyone is not willing to be mediocre. This has resulted in so-called “innovation achievements” that are not innovative at all. This practice will consume valuable resources of the enterprise. Calling “projectization“ as “everything is a project”, everyone will find ways to launch some projects whereas the strategic goals of the company will be ignored. The temporary nature of projects can exacerbate the lack of sense of security. As a result, it is not unusual that after a © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_8

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project is secured, people will pay attention to how to secure the next project even before any deliverable has been achieved. There is nothing wrong with the statement of “you are not a solider if you have no ambition to become a general.” However, if it is interpreted as: “you are not a solider if you vying to become a general”, it likely leads to the phenomenon of “more willing to be the chicken head rather than being the phoenix tail”, i.e. trying best to identify projects without consideration of the strategic goals of the company. The importance of constantly pursuing new projects will be greater than the importance of pursuing project outcomes. As a result, we will be as busy as “wearing red dancing shoes”, exacerbating the situation of “everyone in the company is busy on hiding the truth”. In the society, a group of “professional judges” who are busy on evaluating projects and coordinating project resources will be formed. The CEOs will be exhausted, and the enterprises will be extremely confused. More than two thousand years ago, Guanzi has remarked that “if internally the government has not been strengthened, ventures abroad will be unsuccessful.” Guanzi also stated: “therefore, the proper way of preparing for an attack is always to be certain that these detailed plans have been completed at home before troops are dispatched beyond borders. If this has not been done before troops are dispatched beyond the borders, their battles will be self-defeating and their attacks self-destructive.” Enterprises are market-oriented and customer-oriented. However, this does not necessarily mean that all employees are directly dealing with the market and customers. Projects are directly associated with the market and customers. If the project is the front line, the company’s functional departments provide the logistic support. It is impossible to win the battle if the troops do have effective support. It is understandable that the project leader takes the project as a priority. They pursue the success of a project and local befits. By contrast, functional departments need to give priority to the company as a whole, e.g. enhancing the long-term viability of the company, and pursuing the effectiveness of the corporate strategy. Project plays a crucial role in a rapidly changing society. However, we should not undertake projects for sake of projects. Such lessons have been learnt in businesses, government agencies, universities, and research institutions. The main focus of top management of the enterprise is to manage non-repetitive projects. However, it is not appropriate that everyone focuses on projects. By contrast, most people should undertake production-oriented with focuses on efficiency and standards. The complementation and interaction between these two types of activities help to achieve the benefits and efficiency of the enterprise. In order to increase the revenue, some enterprises will introduce “incentives” internally. The common approach is to “introduce internal competition mechanism”. The “internal competition mechanism” of many companies is essentially similar to the business commission system. Such internal competition is likely to form a serious “silo effect” phenomenon between various departments. These include: lack of mutual trust, and even bidding on the same contract. It is unusual that the all departments focus more on other departments in the company rather than other enterprises and the customer, as the consequence of the internal competition. In

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such circumstance, it is imperative to promote the cooperation between the frontline (project teams) and the logistic support (i.e. functional departments) within the enterprise. Should an enterprise introduce competition? The answer is “Yes”. This is because everyone has weaknesses such as laziness, selfishness, and greed. However, managers should consider carefully what the competition is about. There are two major aspects of competition in an enterprise, i.e. effectiveness and efficiency. Effectiveness focuses on external aspects whereas efficiency focused on internal aspects. Simply put, it is “broadening sources of income externally and reducing expenditure internally.” For project management, the competition for efficiency lies in the stakeholder satisfaction based on quality, cost and schedule. If quality is a constant (although it often changes due to various issues such as demand mining), the competition for the efficiency of project management lies in the competition for cost and schedule. If the company encourages the competition of internal benefits rather than the competition for the internal efficiency, the outcome would be “compromising externally and fiercely competing internally” rather than “broadening sources of income externally and reducing expenditure internally.” This will lead to the divergence of resources, making a competitive enterprise a small workshop-like mixture with the name of a large enterprise. The “wolf culture” is often advocated by a large number of companies. However, the consequence is that “wolf culture” was applied to other departments of the company and customers rather than the external competitors. The concepts of project management are necessary for the completion of tasks. However, it is not beneficial to adopt the form of project unless the following criteria are met: the task involves multiple parties, the scope can be defined, and the characteristics of uniqueness are significantly greater than the characteristics of repeatability. “Everything is a project”. However, it depends on whether it needs to be managed as a project. For example, for some construction companies, the implementation of the project has been regularized. As a result, the management faces challenges mainly from the market, capital operation, efficiency of temporary resources, rather than the implementation stage of the project. In other words, the main challenge for such companies is not the project management with the project manager taking the main responsibility. Rather, the main challenge lies in the project governance, which requires the senior management of the company to take responsibility. For these project-oriented enterprises, a new challenge is the deprojectization to achieve the customized needs of the project with the efficiency of industrial production. One of solutions is the prefabricated construction method. In the aerospace sector, each “model” is actually a project cluster. In the traditional management mode, each model has its dedicated site, supporting facilities, drawings and specifications. The compatibility between different models is very poor. This has resulted in significant waste of resources such as hardware facilities, equipment, tooling and materials. Similarly, it prevents the full use of discipline resources for the technological innovation. Since 2016, some research institutes of the Chine aerospace industry have carried out research and practices of “de-modeling”. At present, PPP projects are very popular in China. Project characteristics only account for a proportion of PPP, or even a very small proportion. Indeed, most challenges associated

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with PPP derived from operations that last for two or three decades. This is due to uncertainties associated with new technologies, new political and social environments, and new demographics during this long-period of operations. In other words, the focus of PPP is the deprojectization after projectization, rather than an investment project.

From the perspective of society as a whole, project-oriented enterprises and platform-based enterprises (that are de-projected) will be the two main business entities of Yin and Yang in the VUCA environment. Without a project-based platform, enterprises cannot cope with the world of complexity, change, and uncertainty. Platform-based companies (that are not de-projected) cannot supply the resources needed by project-based enterprises with high efficiency. Nor can they provide customers with high reliability and low cost that are derived from scale and standardization. Since Xi Jinping was elected as the general secretary of the CPC Central Committee and the chairman of the Central Military Commission, he has made major reforms to the PLA’s governance mechanism. One of these major reforms is the transformation from the original “armed service branches” and “military region” system into a “armed service branches” and “Theater commands region” system. The “military region” is zone-based. However, the boundaries of modern warfare have become blurred and intertwined. This land-based approach will struggle to adapt to the changes in modern warfare. It is a matrix mechanism where “armed service branches” is responsible for training and “theater commands region” is responsible for battling. Such matrix mechanism can effectively integrate the overall military resources and enhance the fundamental capabilities of the military force. Similarly, this mechanism facilitates the cooperation amongst all military forces to cope with the complex and ever-changing needs of the modern warfare. If a war is a project or project cluster in which the “theater commands region” takes responsibility, the “armed service branches” are the functional departments that manage the platform.

Projects are featured with uniqueness, high degree of innovation and a fastchanging environment. As a result, associated institutions are renewed frequently, which can cause confusion in a project team. A characteristic of the knowledge economy era is “changes always go beyond plans”. To a certain degree, the focus of project management is on the management of change. Bureaucracy inherent in institutions will struggle to adapt to such rapid change. In a rigid system, projects are likely to maintain the system but losing opportunities. In a changing environment, “posts” are no longer sufficient to deal with flexible tasks which need to be replaced with “characters” for specific tasks. At present, the salary of knowledge workers has been increased substantially. As a result, it is increasingly expensive for an enterprise to have full possession of knowledge workers. Meanwhile, the ratio of output to inputs will be gradually reduced. Therefore, most enterprises will employ knowledge workers through dynamic teams (i.e. projects). However, many enterprises did not respond to dynamic tasks with dynamic resources, despite using terms of “project” and “project management”. Rather, static resources were used to cope with dynamic tasks. Human resource cost plays a crucial role in the overall cost in such enterprises. It is inevitable that the human resource cost will rise. In addition, due to the fragmentation of resources, it will result in delays in various types of projects being undertaken by the enterprise, thus affecting the credibility of the enterprise.

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In enterprise management, there is a competition between specialization or a diversification. Most evaluations concentrate on the aspects of market, capital, and core technology. However, enterprises can be very flexible as long as resources can be quickly concentrated. There is no difference between diversification and specialization. In other words, no matter it is specialization or diversification, it needs to draw the full strength of the enterprise as a whole. It is well recognized that systematic thinking is required in the project management. However, it is not unusual that the focus is placed on the local interests whereas the overall interest is overlooked. While a problem is solved, another or a series of even more difficult problems were created. It is imperative for enterprises need to transform the ownership of resources from functional departments to projects, the accountability from posts to roles, and the competition for internal benefits to external benefits. Only in this way can we move toward the “real” project management. Project opportunities will appear and disappear in a short period of time. It is crucial for enterprises to seize these opportunities in a timely manner and turn opportunities into positive results through projects. However, resources are required to complete projects whereas enterprises cannot afford to reserve sufficient resources in advance for unpredictable opportunities. It is a challenge to the enterprise management, project governance and project management to make resources are “available when needed, used well and returned to the source when the tasks are completed”. Project is a platform. The role of project governance is to provide a universal solution for specific project management problems through unified platform, i.e. a stable, efficient and reliable support. The project governance platform is a collection of reusable conditions for multiple functional projects. Such platform is useful to improve the efficiency and reliability of project management and enhance interoperability across multiple projects.

Collaboration Between Temporary Projects and Stable Functional Departments It is very common that in an enterprise, “all functional departments will submit the plan for the next month before the 5th of this month.” There is an assumption implied in this statement, i.e. all functional departments can develop plans independently. However, the fact is, the works of various functional departments of the enterprise are related. The activities of one functional department are affected by other functional departments. It is unrealistic to develop plans independently. As a result, functional departments will develop plans for sake of developing plans, which leads to the phenomenon of “active sabotage”. There are three key components of the effective organizational mechanism, i.e. process, responsibility and performance management. There is a clear logical relationship between these three components: the process is used to clarify all tasks that the organization needs to accomplish; the responsibility is to clarify who will be

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responsible for each task; the performance management is used to identify methodology and drivers during the completion of works. In many companies, in the event of unsatisfactory results, managers tend to solve problems from the perspective of assessment. They take it for granted that the performance of the company will be improved by means of changing the way of assessment and corresponding rewards/punishments. Others believe that the organizational mechanism of the company should start with the establishment of an organizational structure. It is overlooked that the organizational structure is established to ensure the completion of tasks. A functional department is established to facilitate the management of works with the same type. “If the skin does not exist, the hair will have nowhere to be attached to.” Without the classification of tasks, the organizational structure will be set up in a hurry, which will only lead to the phenomenon of “active sabotage”. Each functional department will create a lot of things in order to prove its value. According to the principle of “setting up role of personnel according to tasks”, it is necessary to determine the project process in the first instance, and then clarify the settings and responsibilities of each functional department. The fundamentals of organizational design are: clarifying the project workflow and activities, drawing resources from each functional department through processes and activities, and prioritizing the use of resources according to the sequence and importance of processes and activities. The matrix organizational structure is a common form of project organization. There is a problem associated with this organizational form, i.e. multiple superiors. It is essentially a conflict due to the competition of resources between temporary power and stable power. All projects are temporary by nature. During the implementation process, the project manager only has the power to use resources during the project life cycle. Such power has obvious temporary nature. By contrast, the functional manager has more stable power than the project manager. In the case of limited resources, the focus of these two powers must fall on the competition of resources. The goals of a company can be broken down into two components: (1) goals of each functional department, and (2) goals of each project. The decomposition of goals indicates the decomposition of responsibility and pressure. Resources are required in order to accomplish the goals. According to the conventional understanding, resources mainly refer to exclusive resources such as people, finances, and materials. Therefore, there is competition of resources between projects and functional departments. The project is temporary whereas the functional department is relatively stable. The project’s assessment objectives are rigid while the department’s assessment objectives are flexible. In addition, each functional department has more real power than the project. Functional departments have better access to these resources. As a result, it is difficult to realize the projectization in the enterprise. An enterprise may seem to be project-oriented but is actually based on the division of labor in the stable functional departments to complete the project. However, functional departments are often unable to withstand the pressure that companies assign to them due to a number of external factors beyond their control. For example, the profit per employee is a common assessment criterion adopted by human resources department. However, due to sales and corporate structure, the human resources

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department cannot afford such pressure. In fact, such criterion is of no practical significance even if it is easy to assess. Such management method may seem to ensure that all functional departments and projects bear responsibilities of achieving the corporate goals. In reality, there is a lack of concentration for the corporate goals where there is a lack of cooperation between functional departments, and between functional departments and projects. This leads to the phenomenon of “everyone in the company is busy on hiding the truth”. The fundamental issue of the matrix organization lies in the inaccurate positioning of the functional departments. The functional departments are oriented toward functional work rather than corporate goals. To solve this problem, it is necessary to shift the role relationship between the organizational unit and the project team. Consequently, the corresponding driving force can be used to promote a new relationship between the functional departments and the project. In a changing environment, corporate value depends on the achievement of goals of each individual project. Therefore, all functional departments should be classified into two groups: (1) dynamic departments that complete projects, i.e., the project team that is the user of the project resources; (2) static departments that provide support to the completion of the project, i.e. the provider of project resources. In order to solve the problems in the matrix organization, it is necessary to shift the paradigm for the function settings in functional departments. The “functions” of the functional departments should be shifted from “management”, “production” and “procurement” to “resource assurance”. All functional departments should become a supply and maintenance department for various professional resources, and the functional department manager needs to become a “resource manager”. In this context, “resource” is a broad concept. It refers not only to traditional resources such as people and money, but also to information, rules, methods, and so on. The driving force for the transformation of departmental roles is to establish a corresponding performance evaluation system. This is because “tell me how I will be judged, and I will tell you what I will do” is a common mentality. Everything will be changed once the way of evaluation is changed, otherwise nothing will be changed. When defining indicators for the performance appraisal, each functional department reports the evaluation indicators to the superior at the same time and independently. This only works when all functional departments can work independently and is not feasible when functional departments need to work together on the project platform. The performance appraisal method of the enterprise should be oriented toward the project goal that generates benefits. Consequently, the responsibility of static and dynamic departments can be identified. Many enterprises are presented the difficulty of assessing the performance of functional departments. In fact, such assessment is not difficult if its role of supporting projects is clarified. The fundamental principle is that the provider of the resource is assessed by the user of the resource. However, it is often the opposite in practice. No wonder why such problems cannot be solved. Have a look on the following scenario. A, B, and C are the three departments of the enterprise. The department A (project team) is responsible for the implementation of the project, and the B and C departments are the resource providers for the project. The effective performance appraisal method of the enterprise should start

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from department A. The first step is to formulate the performance target of A. A should put forward corresponding requirements according to its performance goals, such as the need of some resources from C. In response to the requirements of A, C raised the requirements for B accordingly. In order to meet the above requirements, B raised requirements for A and C accordingly. After all these requirements are indexed, it is easy to define performance appraisal indicators of each department. The Zhongyong oriented project organizational mechanism is appropriate in projects as it can not only concentrate on the realization of the project objectives, but also comprehensively and effectively organize the enterprise’s resources. To achieve this goal, it is necessary to use the process as the avenue to clarify the role relationship between the functional departments and the project. The process consisting of project tasks is most important for achieving results. The tasks in the process draw resources from the “resource pool” that consist of functional departments. Once the task is completed, the resource is released back to the “resource pool” so that it can be used by other projects or other tasks (see Fig. 8.1). In this way, it is possible to realize the dynamic scheduling of resources, and to produce the result of “paying three employees with four employees’ salary to complete tasks that used to be completed by five employees.” The process is a way to show the value relationship between functional departments and the project. Similarly, it is the organization avenue of the enterprise. At the same time, it is necessary to establish a performance evaluation method that defines the performance indicators of each project and related departments reverse from the enterprise goals. This provides a driving force for realizing the transformation of departmental roles. In addition, the efficiency of this organizational mechanism lies in the degree of transition from post management to role management as well as the effectiveness of the interface between roles. Enterprises need to continuously refine and reuse knowledge in order to achieve the dynamic

Fig. 8.1 Project process calls resources from “resource pool”

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Fig. 8.2 PMO is used to maintain a balanced relationship between project department and resource department

scheduling of resources. As a result, the enterprise’s organizational mechanism will be formed. In Vanke’s internal management, there is no competition between “functional” and “matrix” organizational structure. There are only processes. Focus is placed on the process-oriented enterprise, emphasizing that all functional departments, levels and professional lines serve the processes. Wang Shi1 Let the person who heard the sound of the cannon to be the commander. —Ren Zhengfei2

It is generally perceived that the project manager should be responsible for the project. However, the project manager cannot and should not be responsible for the project or the project plan. This is because the supply of resources should be taken into consideration in the project plan, while the resources are under the control of resource departments. A project manager wants to obtain resources as much as possible whereas the resource manager wants the project to consume resources as little as possible. The conflict between the project department and the resource department needs to be balanced by means of the Project Management Office (PMO) established within the company (see Fig. 8.2). Delegated by the enterprise, PMO will monitor each project and be responsible for the benefits derived from all projects within the enterprise. After the project manager proposes resource requirements to the resource manager according to the project objectives, the PMO evaluates the resource requirements based on the contribution of the project to the value and benefits of the enterprise, thereby determining the rationality of resource requirements and assigning priorities. To a certain degree, PMO is the “real” management organization within the enterprise. A PMO can be either a department or a consortium of several departments. When the functional department becomes the resource supplier, the competition for resources between the functional department and the resource 1 Founder 2 Founder

of Vanke Group, China’s most well-known real estate company. of Huawei Technologies Co., Ltd., China’s most well-known IT company.

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using department (i.e. the project) will be shifted to the competition for resources between projects. This leads to fundamental change to the problem of “one employee with multiple superiors”, which can be resolved via the priorities of resource inputs determined by the PMO. There is an additional question in such organizational mechanism: how to realize the transformation of employees from post-oriented management to role-oriented management? The “hometown system” is the most common approach adopted by enterprises where the posts are the unit of management. The “hometown system” of an enterprise is actually a “departmental subordinate system” and is a product of an organizational framework in a relatively static environment. The superior has the power to assign tasks to subordinates, to determine the priority of their works, to make decisions, to set time limits for subordinates’ work, to hire or dismiss subordinates, and so on. Subordinates are a resource of the superior. The superior can occupy such resources, has control over the subordinates at least in the workplace. Such possession is exclusive and hierarchical, and one subordinate cannot be possessed by two superiors. The superior issues instructions that are responded by the subordinates. The development of strategies is the responsibility of the superiors whereas the subordinates are responsible for the execution of strategies. The fundamental of human resource management in project-oriented enterprises is to improve the ability to respond to dynamic tasks with dynamic resources. To this end, it is necessary to transform the “departmental subordinate system” of resources into the “role allocation system” according to projects, turning static posts into dynamic characters. Only in this way can we move towards the true project management. Projects are featured with uniqueness, a high level of innovation and constant changes of the project environment. As a result, the static post system cannot cope with the changeable project tasks. It is necessary to transform the “departmental subordinate system” into the “role allocation system” according to projects. This helps to improve the effectiveness and reliability of governance. Challenges to project governance to facilitate various stakeholders to: (1) quickly understand the role and take corresponding actions; (2) quickly identify issues; (3) quickly develop solutions; (4) quickly submit the project results; (5) withdraw from the project on a timely basis after the task is completed; and (6) take on the new role. The importance of dynamic scheduling of project resources is self-evident for the project governance success. The role within the project refers to the combination of responsibility of the project stakeholders for undertaking the project tasks and authorities. “Role” refers to a person or organization, and a specific responsibility and authority attached to it. The social network formed by the project stakeholders is a network of responsibilities and interests, which have both needs and responsibilities. Their responsibilities are related to the strategies of fulfilling stakeholders’ needs. With a focus on project stakeholders’ needs and key success factors of the project, all roles within the project can be classified into four fundamental governance roles: “planning”, “operation”, “maintenance” and “monitoring”. The “planning” role refers to the department and personnel who propose the project requirements and project implementation plan. The “operation” role refers to the departments and personnel that meet the needs of the planning role. The “maintenance” role refers to the department and personnel that

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provides resources and tools for the operational role. The “monitoring” role refers to the departments and personnel who supervise, manage, and evaluate the behavior of planning, operation, and maintenance roles.3 After the governance roles are determined, it is necessary to establish a mapping relationship between the role and the subject of responsibility, i.e. the relationship between governance roles. The relationship between project governance roles is a social network-based regulatory relationship that can be established through formal contracts (e.g. project assignments, commercial contracts, etc.) or through informal contracts (e.g. intra-organizational affiliate programs, psychological contracts in team building, etc.). A real value alliance between project stakeholders can be formed by establishing the linkage between project governance roles. Meanwhile, it is crucial to form reusable knowledge after the project is completed so that the risks of future projects can be resolved effectively. The key components of establishing the relationship between project governance roles include: defining the role of risk management, determining the control method of risk management roles that are acceptable by project stakeholders. Together with the classification of project governance roles, these are key factors to establish the project governance structure and to ensure its reliability.

Fulfilling the Unique Needs with Standardized Efficiency For companies, originality is not as controllable and efficient as reused integration. There are two categories of innovation: originality and re-integration. It is generally perceived that originality is the most important. In fact, true originality is unpredictable and uncontrollable which is also difficult to manage. Due to the pressure of competition, enterprises need to provide new products within a limited time and cost, instead of emphasizing “allow failure” in universities and research institutions. This is also the reason all projects are associated with time and cost constraints. To solve the contradiction between “innovation” and “time and cost constraints”, it is necessary to find a “controllable approach of innovation”. This approach is the “innovation by reuse” which reflects the unity of opposites (i.e. Yin and Yang). Reuse is the best approach to improve efficiency and reliability, which requires standardization. So, how can we standardize the uniqueness of each individual project? The answer is decomposition. The contradiction between uniqueness and innovation can be solved by means of “decomposition-standardization-reuse”. I Ching is the classical book in China which explains changes and responds to changes. Yin and Yang, two fundamental elements were used in I Ching. In I Ching, eight fundamental natural conditions were defined. The combination of these eight fundamental natural conditions were used to describe the regularity of the ever-changing natural and social phenomena. The same principle is also said in “The Art of War”: 3 Ding

Ronggui, Fei Zhenguo, “The Iterative Process Model for Research on Project Governance”, Dongyue Theory, No. 3, 2008.

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In all fighting, the direct method may be used for joining battle, but indirect methods will be needed in order to secure victory. Indirect tactics, efficiently applied, are inexhaustible as Heaven and Earth, unending as the flow of rivers and streams; like the sun and moon, they end to begin anew; like the four seasons, they pass away to return once more. There are no more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard. There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination they produce more hues than can ever been seen. There are not more than five cardinal tastes (sour, acrid, salt, sweet, bitter), yet combinations of them yield more flavors than can ever be tasted. In battle, there are not more than two methods of attack–the direct and the indirect; yet these two in combination give rise to an endless series of maneuvers. The direct and the indirect lead on to each other in turn. It is like moving in a circle–you never come to an end. Who can exhaust the possibilities of their combination?

Project management has elements of both science and art. What is science? What is art? What is the difference between science and art? It is more likely to be art if we do not have sufficient and in-depth understanding. Otherwise it is more likely to be science. A famous painting can be copied by decomposing it into various parts; a famous song can be spreader by recording its score. When we have highpixel copying technology and high-fidelity recording technology, it is easier to copy famous paintings and spread famous songs. Technology is the decipher of art, and technology derives from the accumulation of knowledge of details. Consequently, we can seek more effective project management theories and methods. The uniqueness of projects can be understood from two perspectives. On the one hand, the project itself is unique to the company that undertakes the project. Once the project is decomposed and decomposed, it can be found that many of these components are what we have done before or are familiar. On the other hand, the project is unique to the person undertaking the project. However, within the enterprise, someone has completed the project or part of the project. The major challenge is to understand how to decompose the project tasks and how others have successfully completed the project tasks, rather than understanding the particularity of the project. The value of the project is largely determined by the level of execution efficiency. Indeed, the core of project management is to improve the execution efficiency. To improve the execution efficiency, it is necessary to improve the modularization of the project and improve the reusability of these modules. As remarked in Tao Te Ching: “(The master of it) anticipates things that are difficult while they are easy, and does things that would become great while they are small. All difficult things in the world are sure to arise from a previous state in which they were easy, and all great things from one in which they were small. Therefore, the sage, while he never does what is great, is able on that account to accomplish the greatest things.” Guanzi also stated: “We cannot expect ordinary people can understand what only the wise people understand while fools do not understand. We cannot expect ordinary people to do things that only the clever people can do

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while the stupid people cannot do.” Indeed, we can only make things simple if we conduct decomposition. Only if we make things simple, can ordinarily make it. Only if ordinary people can do can we make big achievements. In the context of projects, the turnover of employees will result in the loss of experience. Therefore, it is crucial to decompose the project tasks (modularization), encapsulate their interfaces (standardization), and perform role training accordingly. These will help to deal with following questions: (1) how the ordinary people can quickly master the necessary skills, (2) how the newcomers can quickly fill in the role to produce results, and (3) how to enable people to leave the project after the task is completed without influencing the work of the latecomers. The so-called modularized project management is to transform the project knowledge and experience internal and external of the enterprise into project management technology by decomposing, standardizing, encapsulating and improving the reusability of the modules required to complete the project. As a result, the reliance on the individual knowledge of the project team members can be reduced. Similarly, the individual efficiency of project team members and the overall project execution efficiency can be improved. To achieve modularized project management, enterprises need to go through the following steps: First, the project is decomposed into modules that are standardized and packaged to improve their reusability. The project is formed by integrating following components: (1) Process, i.e. a series of relatively fixed steps to achieve a certain goal; (2) Activities, i.e. the work undertaken to provide results that meet the requirements; (3) Roles. Each project activity is assigned to a specific role. The role represents the tasks undertaken by the individual in the project and defines how task will be undertaken. (4) Workpiece, i.e. the product of the process. The workpiece provides inputs and outputs to the activity as well as the communication mechanism between the activities. The role uses workpieces to execute activities and produces workpieces during the execution of activities. Sometimes it is difficult to decompose a project into modules and consequently standardize and encapsulate them. This is because there are things that we don’t know and can’t be foreseen in advance, i.e. so-called “the devil is hidden in the details.” Even if we are already familiar with a lot of works, it is not easy to define these “very familiar” tasks. Enterprise-wide knowledge management, creativity, and perseverance are required. The modularization of a project needs to be conducted with the assistance of project managers and project team members. However, it is not the main responsibility of project managers and project team members because they don’t have sufficient time to do so. Similarly, they generally don’t fully understand what modules are required to complete the project. Indeed, the project management office should bear such responsibility. If the project management office does not exist, this task needs to be undertaken by the functional department.

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It is worth noting that the modules will not effective unless they can be packaged. The so-called encapsulation indicates that as long as the two inputs to one module are the same, the corresponding output results will be the same. Similar to an integrated circuit, we only need to deal with its external interface, without having to understand the internal details. Consequently, we can combine them into different functional and complex products. Modularization, encapsulation, and reuse are three keywords that simplify project complexity, reduce project costs, ensure the reliability of project quality, and improve the project schedule performance. Second, provide trainings to project team members according to roles. Improving the substitutability of employees will enable companies to take the initiative in a business environment that is featured with fierce competition to attract talents and increasingly frequent turnover of talents. It is undeniable that every company always has indispensable personnel. However, the proportion of these employees must be controlled to be small. In fact, no one is completely irreplaceable. The real meaning of “weak substitutability” is that it takes longer and incurs higher costs to find a replacement. Therefore, it is critical to find ways to shorten the time and reduce the cost. Such approach is the professional division of labor. Nowadays versatile talents draw a lot of attention. However, professional talents are those who are really efficient and reasonably priced. Efficient completion of the project requires effective integration of various professionals according to different roles. It is necessary to enable people to do what they are best at and accomplish things with the highest efficiency. Those works they are not good at and inefficient should be handed over to others. Many companies lack effective mechanisms for integrating human resources, and the responsibility is placed on those with comprehensive skills. This results in weak substitutability of employees and low efficiency. Only when we can define and decompose project roles can we effectively train project team members to quickly compete for project roles. Similarly, the inconsistency between post settings and actual work can be eliminated that are common in enterprises. Third, mechanisms are established to enable project team members to work following the modularization approach. This is the most difficult step during the whole process. To accomplish this step, we need to shift the paradigm and adjust the management system of the enterprise. It is often difficult for efficiency and individualism to coexist. It is unrealistic to hope that the execution efficiency is improved while the personality and unique style of project team members can be fulfilled at the same time. As project activities are closely related, the flexibility of an activity will result in a ripple effect, which will eventually lead to a significant impact on the project plan. In order to achieve modularized project management, it is crucial to first establish the concept of “efficient work, happy life”. After all, only a few people can have fun from the work process. If we have unrealistic expectation that everyone can work happily, it is more likely that both work and life will be negatively affected. Of course, it is not appropriate that enterprises regard employees as machines, nor can they perceive that employees are simply driven by economic interests. However, these are not reflected in the completion of project works. Rater, these are

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mainly reflected in the aspects of incentives, job deployment, training and personnel development that are outside of the project works. Therefore, enterprises must set up a corresponding management system to ensure the realization of “efficient work, happy life”. At the same time, enterprises must enable project team members to be aware of the relationship between project roles and their tasks, the impact of local changes on the overall interests. Similarly, focuses should be placed on the interface amongst the packaged components as well as the standard communication. These help to achieve the modularized project management.

Dedicating Valuable Experience Can Be Integrated with Knowledge Empowerment The project governance platform is a collection of reusable conditions for multiple functional projects that can increase the efficiency and reliability of project management and enhance the interoperability across multiple projects. The project governance platform is characterized by its stability and reusability. Stability indicates that the project governance platform is long-term, whereas reusability indicates that it is a collection of processes, knowledge, techniques, and methods. Guanzi remarked that “there is no need to have one person to serve multiple posts.” However, a large number of companies spend a lot of resources to hire versatile talents. In fact, nothing is more confusing than this. The consequence of excessive reliance on versatile talents is that the accumulation of knowledge and skills that belong to the company is overlooked. As a result, companies will be more dependent on versatile talents. When companies do not have their own knowledge and skills, “lack of high-quality talent” becomes the best and most useless excuse. Enterprises that respect talents are more likely to sustain development. By contrast, those enterprises that rely on a few “capable people” are more vulnerable. The vicious circle of over-reliance on versatile talents is shown in Fig. 8.3. There are significant market demands for versatile talents. Therefore, high-quality versatile talents are often highly sought after. As it takes a long time to nurture these talents, they are becoming increasingly on-demand. Consequently, they are increasingly reluctant to contribute their personal knowledge and skills to form the critical assets of the enterprise. This will make enterprises more dependent on these “talents”, i.e. a vicious circle. Along with the increasingly turbulence to the business environment, the term “post” is still important to a company. However, the term “role” deserves more attention than “post”. In order to fulfill its responsibilities, the role requires the necessary capabilities and information. In the current management research and practices, focus is placed on the tasks that need to be done. By contrast, there is lack of sufficient attention to the various roles to complete the task. There is lack of clear definition of: roles required to complete a task, the responsibilities of each role, the interface between roles, and the information required for the role to complete the task. The ability that a role needs is relatively simple. With the help of workpieces,

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Fig. 8.3 Vicious circle of enterprises’ over-dependence on compound talents

this ability can be formed quickly. Therefore, efforts are required to examine the ways to reduce the dependence on scarce versatile talents and to shorten the period of time that dynamic personnel are needed to complete unique tasks. Two of potential approaches are: division and integration of roles. The more knowledge that belongs to the enterprise, the less dependence the enterprise has on the individual knowledge and ability of the knowledge worker. The higher the overall efficiency of the enterprise, the stronger the ability to resist the turnover risks. However, with a consideration of their own job security, knowledge workers are likely to be unwilling to contribute their knowledge to form the knowledge base of the company. They are generally reluctant to separate knowledge from themselves. Because knowledge, technology, and people cannot be separated, these knowledge workers are the bottleneck of many companies. As a result, knowledge workers are struggling in multiple tasks. Although this will result in lower efficiency, it could be beneficial to knowledge workers as they become talents that are highly sought after. We advocate “people-oriented“ principle. However, from the management perspective, it is crucial to reduce the dependence on people, especially on “capable people”. Before the TAYLORISM was introduced, people were assigned the first priority. People relied on their own abilities to work. After the TAYLORISM was introduced, the system was assigned the first priority while people conduct works according to well-designed scientific methods. After several decades, people are assigned first priority again where “people-oriented“ approach has become very popular. Many companies have pinned their hopes on “talents”, or the knowledge, experience, skills

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and even intuition of a few capable people. There is no doubt that high-quality talents are important. However, with the accumulation of overall knowledge and technology within the company, is it the turn of the system to be assigned the first priority? This is not a simple return of the TAYLORISM. Rather, it is a spiraling-up management law that is consistent with the dialectic principles. The business mode and management philosophy of every company needs to be adaptive to changes. The development of Internet technology and social security systems has introduced substantial disruption to enterprises. If we are not aware of these impacts and develop corresponding strategies, the enterprise will miss out development opportunities and even struggle to survive. In the future, enterprises will become more flexible with blur boundary and ultraflat organizational structure. In the past, power was the key to maintain traditional organizations, which will be gradually replaced by contracts. In such environment, the business segment or business unit of the enterprise will be established due to the emergence of project opportunities, and will be dissolved due to the completion of the project. When the project opportunity arises, the project stakeholder social network is developed. In this social network, the project sponsor is a core node which draws its resources according to the contract rules. As the project progresses, some nodes of this social network will disappear due to losing the stickiness to the network. Meanwhile, some new nodes will appear and stick to this social network. Some companies will play the role of developing this social network while others will play the role of network nodes. The company’s commitment to the project has transformed itself into a dynamically evolving project stakeholder ecosystem. The future cannot be predicted. Therefore, we have to rely on dynamic projects, mutual cooperation between stakeholders and continuous creation of value so that the enterprise can survive and sustain development. Three major competencies of companies are: the ability to capture project opportunities, the ability to build a project stakeholder network, and the ability to maintain the effective operation of such networks. The critical components of organizational-level project management are: the formation, maintenance and dissolution of interactions between people and projects, between projects and enterprises, between business environment and social environment. In the era of VUCA, very few companies can promise to keep employees as long as they have good performance, and very few people can promise to work in a company forever. For enterprises, it becomes increasingly expensive to retain talents whereas the possibility of losing talents becomes increasingly higher. For talents, the longer they stay in an enterprise, the bigger lose they will suffer in terms of long-term employment opportunities. Meanwhile, they are more likely to be abandoned by the enterprise. Because it is impossible to accurately predict the future, it is difficult for enterprises to cultivate and reserve talents in advance. What we can do is to minimize the time to discover talents, attract talents and build effective game rules when project opportunities arise. In such circumstance, the concept of “human resources” will be replaced by “stakeholders”. The “resources” implies the possession and domination

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of power, which is determined by the ability to commit to future interests. In a changing and turbulent environment, it is difficult for companies to make long-term and reliable commitments to people. Therefore, their power will be weakened, and traditional “human resources” will be turned into “stakeholders” cooperating for their own benefits. The participation of stakeholders in a project is the result of selection, i.e. it is more effective to place energy and time in this project than in other projects. An assumption for building a project governance relationship is “We come from everywhere and come together for our own interests”. For enterprises in a constantly changing environment, the affiliation between the superior and the subordinates will become the dynamic contractual relationship between Party A and Party B. The organizational hierarchy constructed according to the level of power will be gradually transformed to the ultra-flat network structure that components become interconnected and interdependent. The traditional concepts of “organization” or “enterprise” concept will be replaced by “community” or “project ecosystem.” It is imperative to solve the contradiction between the temporary nature of the project role and the long-term nature of the career. To achieve this win-win, the enterprise needs to empower the stakeholders, i.e. stakeholder’s ability will be enhanced when cooperating with this enterprise. Consequently, the ability of stakeholder to be absorbed by other enterprises or projects will be enhanced. Similarly, stakeholders need to empower enterprises. In other words, in the process of working with enterprises and projects, stakeholders will contribute their knowledge and experience. Such knowledge and experience will become an intangible asset that can be reused by enterprises or projects. In order to transform the personal experience of stakeholders into reusable intellectual assets of the enterprise, it is necessary to understand human nature and to solve the concerns of “once apprentice learns how to do works, the master will lose all jobs”. In order to establish a project governance platform, it is necessary to form intangible assets that can be reused by enterprises. These intangible assets derive from the knowledge that is formed through the integration of individual experience of stakeholders. The project is dynamic by nature. For a person, his/her performance can be clearly evaluated according to the project he/she is responsible for. However, as the project is temporary by nature, the lack of job security derived from this temporary nature of projects will offset the enthusiasm of employees that are responsible for the project. Companies cannot promise long-term jobs to their employees. However, companies can promise that employees’ abilities will be enhanced during their stay at the company. Such commitment to empowerment will enhance employees’ sense of security. It is imperative to understand the need for security in human nature. In the article “Strategic Issues in the Anti-Japanese Guerrilla War”, Mao Zedong put forward the development of “base areas”. This is the “strategic base” which provides crucial support for the victory of China’s anti-Japanese guerrilla war. Without a base, the guerrillas are vulnerable to the weakness of “roving bandits”. Li Zicheng’s failure lies not only in internal corruption, but also in the major strategic mistakes without base areas. Similarly, without the support of the project governance platform,

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the individual projects of the enterprise will be isolated without reinforcements. These projects will become “roving bandits” and fail eventually.

Constanta-Nicoleta Bodea, Romanian, Professor, Ph.D. at The Bucharest University of Economic Studies, Romania

As an academic for more than 30 years in Romania, I am relatively familiar with the interests of academic community from the Central and East European (CEE) region in establishing and developing collaboration with China in teaching and scientific research. Until end of 80s, the economic, scientific and cultural collaborations between countries from CEE region and China were strong, based on a long tradition. After the political and economic changes which took place in the region by end of 80s, many analysts have predicted a significant decrease of the intensity of these collaborations, including in universities. But, what happens, in fact, was that universities kept their interest in developing contacts and collaborations with Chinese academic community, in teaching and research. Considering Romania, as an example, the total number of Romanian-Chinese Studies Centers are constantly increasing. These centers and other Romanian institutions/agencies offer bi-lateral mobility for students, joint seminars and pother scientific and cultural events, and organize calls for joint research projects. The Confucius Institutes in Romania are promoting bilateral cultural relationships, by different activities, such as: courses, seminars, book launches, scientific conferences and workshops. Research represents an important pillar of collaboration between China and CEE countries, at European level, in the framework of “Europe 2020” strategy and “Innovation Europe” initiative, but also at national level, based on bilateral scientific agreements. Joint research structures/laboratories, such as scientific parks and innovation clusters represent an important component of the cooperation network. Most of the joint research projects implemented by Romanian-Chinese teams under the Joint Committee are in the fields of material sciences, biology, agriculture and food, new breeds, energy and environment.

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Academic collaboration in the social-economic field between CEE countries and China can be further enhanced by works focusing on fundamentals of management and governance, based on the Chinese epistemology and logic. The book written by professor Ding Ronggui presents the way of thinking in project management called Taiji Logic. Project management and project governance are explained as processes for identifying and solving the contradictions. For the European academics, this specific perspective on project management offers an extraordinary opportunity for reflection and understanding the specificities of the Chinese approaches in project management.

Chapter 9

Avoiding Weaknesses Associated with the Taiji Logic

There is no end to learning. Xunzi, Encouraging Learning

The fundamental of Taiji logic lies in seeking truth from facts. Meanwhile, the biggest enemy of seeking truth from facts is dogmatism. According to the principle of the unity of opposites (i.e. Yin and Yang), the contradiction can be identified. According to the evolution law of Taiji (i.e. differentiation between Yin and Yang), the best timing to solve the contradictions can be defined. According to the replacement principle of Zhongyong, the solutions can be identified to balance the needs of stakeholders. These are three fundamental pillars of Taiji Logic. The particularity of contradiction is universal. The process of finding the universal law from the contradictions of these cases to form the theory is indeed seeking truth from facts. These theories provide useful hypothetical guidance to future practices. The efficiency and reliability of finding and resolving contradictions can be improved by using these theories. However, these theories cannot provide so-called correct answers for discovering and resolving contradictions. Can the universal law identified in solving contradictions in specific cases be directly used to solve other similar contradictions? This needs to be tested in practices. This is the reason “practice is the sole criterion for testing truth.”1 Taiji logic is based on the balance of interests in specific situations. This kind of “specific analysis of specific problems” is very effective in resolving specific contradictions. However, as stated in “Taiji Chuan”, Yin is not separate from Yang, and 1 On

February 7, 1977, “People’s Daily”, “Red Flag” magazine, and “The People’s Liberation Army” published the editorial of “Critical role of studying documents”. It was stated that “whatever decision made by Chairman Mao, we should be firmly maintained, whatever instructions made by Chairman Mao, we should follow unconditionally.” “Two whatever” was resolutely opposed by Deng Xiaoping, Chen Yun and others, and triggered a big debate on the standards of truth within the entire party. On May 11, 1978, Guangming Daily published an article from the special commentator of this newspaper, i.e. “Practice is the sole criterion for testing truth.” This article pointed out that the practice is the sole criterion for testing truth. The unity of theory and practice is one of the most basic principles of Marxism. Any theory must be tested by practices. This is a fundamental theoretical negation of “Two whatever”. In fact, Mao Zedong made a similar statement in his “Practice Theory” published in 1937. © China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7_9

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Yang is not separate from Yin. Yin and Yang are mutually cooperated and dependent on each other, which is the understanding of Jin.” The stronger the sun, the darker the shadow. Taiji logic has some weaknesses too. By recognizing these weaknesses, we can better use Taiji logic without turning it into a rigid dogma.

Focusing on the Current Contradiction Between Yin and Yang Could Easily Lead to Myopic Management The starting point of Taiji logic is to discover the main contradictions of the system according to the unified concept of Yin and Yang. The contradiction of the system will appear dynamically where the Zhongyong solution is adopted. As a result, the evolution of contradiction is nonlinear. The evolution process of contradictions leads to various directions. There many unpredicted deviations from the original plan when a contradiction is solved. As a result, it becomes particularly difficult to maintain a stable system via strategies. This is well documented in the traditional culture and masterpieces of national strategy in China. However, it is very easy for these strategies to be overlooked if the emphasis is on the contradictory (problem) orientation. When using Taiji logic, special attention should be paid to avoid strategies that are too flexible or lack of long-term stability. In the history of China, it is very common that “every emperor has a cabinet composed of his own favorites.” The phenomenon of “after work is done, those who did the work are discarded” is because the emperor has different contradictions. There is no lack of patriots in China. However, Liang Qichao once criticized that “the Chinese people are very weak in patriotism, and they are not willing to be loyal to the country. They often fight with each other.”2 The phenomenon may be related to the Taiji logic adopted by the Chinese people in perceiving and resolving contradictions. During the Three Kingdoms era, General Guan Yu of Kingdom Shu did not pay attention to the strategy developed by Zhuge Liang on “developing alliance with Sun Quan”. He only focused on the immediate contradiction (fighting for faces against Sun Quan).3 Today, some government officials ignore the negative impacts on the environment because of the focus placed on the immediate contradictions (i.e. higher GDP). This is why Deng Xiaoping proposed that the fundamental policy of the Communist Party of China is “keeping consistency for a century” and that Xi Jinping has repeatedly raised the reasons for party members and leaders to enhance “political focus” and “strategic focus.” “Keeping consistency for a century” does not mean that no development or not making appropriate policy adjustments according to specific circumstances. By contrast, it means that the strategic policies need to be stable and adhered to. This helps to avoid the problem of pursuing short-term efficiency on the 2 See

Liang Qichao’s “Biography of Guan Zi”. “Longzhong Plan”.”Longzhong Plan” is selected from Chen Shou’s “Records of the Three Kingdoms”. At the end of the Eastern Han Dynasty in China, Liu Bei went to the county of Long County to visit Zhuge Liang’s conversation (promoting the strategic decision of the three countries).

3 See

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cost of long-term efficiency. Similarly, “political focus” and “strategic focus” are not contradictory to the persistence of reform. These are the unity of opposites by adopting different strategies according to the specific characteristics of the contradictions however under the strict strategic guidelines. There are common mistakes when adopting Taiji logic. These include: lack of coordination between strategic principles and tactical solutions; being too rigid and dogmatic so that specific solutions cannot be taken according to the particularity of contradictions; being too flexible and overlooking the universality of contradictions. For the government, these biases will result in mediocre officials who lack political achievements, or officials who are constantly trying meaningless activities with longterm damage. For enterprises, these biases will result in a boss who ruins the business or a boss who is eager to make a quick profit and makes the company short-lived. Because of the temporary nature, projects often suffer from a lack of strategic thinking and pursuing short-term benefits. In spite of emphasizing the systematic view, Chinese people actually only consider a small system, i.e. the “the small circle”. It is very common that policies and technical specifications are not adhered to and there is a lack of coordination amongst various disciplines. The principle of life cycle approach is often overlooked in project management. This has been costly to China. Such logic of action has resulted in various issues such as: unfinished buildings, environmental pollution, the attitude of “focusing on the current state whereas the future is overlooked”, and the anxiety of the people. In essence, these actions focus on the local efficiency whereas the overall benefit is overlooked. This can be attributed to the logic of thinking that weighs the interests based on specific contradictions. There are many projects that conduct surveys, design and construction at the same time. It is a vicious circle. One small circle is that government officials expect political achievements as soon as possible; and the company expects that the project will be completed soon and economic benefits will be received as soon as possible. Another small circle is: the emergence of quality problems of the project, defects and reworks, political achievements of the next term of government official, and the emergence of new economic benefits. According to these two small circles, both the company and government officials are satisfied. However, a big circle was not taken into consideration. Quality issues associated with the project result in severe consequences, e.g. sacking government officials, loss of corporate reputation, and damage to national and social interests (see Fig. 9.1).

Fig. 9.1 Overall project benefit is lost due to pursuing local benefits

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(A: The project is carried out in the way that surveying, design and construction were conducted at the same time; B: Rapid completion of the project; C: Achievements of officials; D: Government officials pursue rapid achievements; E: Project quality issues; F: Loss of business credit; G: Officials are held accountable; H: Rebuilding in different names; I: Enterprise failure; J: State or social losses; K: Enterprises achieve economic benefits.)

Due to this short-term effect, the turnover of employees will be more severe whereas their loyalty to projects and enterprises will be weakened. Strategy plays an integral part of project governance yet is often overlooked. Enterprises are accustomed to treating projects as one-off tasks. By contrast, the connection between projects in terms of time, technology, resource, market and industries is largely overlooked. As a result, ad hoc project operation mode is adopted whereas the long-term mechanisms (knowledge accumulation and platform development) are not fully considered. Planning, policies, and even laws often change because of changes in leaders, and eventually become a piece of paper with no actual effects. Because of the flexibility, the boundaries of responsibility are often ambiguous. This leads to problems such as poor cooperation between stakeholders. “The person who ties the bell is the best person to untie the bell.” In essence, the short-sighted strategy is due to lack of understanding of contradictions. Therefore, the solution lies in proper understanding of the main contradictions within the project. Project has value because of the contradiction within the enterprise and even within the country. For the project management personnel, the vision of contradictory can be limited to the project itself. However, for the project governance personnel, the vision of contradictory needs to be extended to the enterprise and even the country. To obtain profits, the first step is to identify what kind of commercial contradiction the enterprise can solve. To obtain the commercial profit, the first step is to identify social contradictions. Similarly, the starting point of determining the fundamental value of the project is to clarify the main contradiction associated with the enterprise’s development. This is also crucial to ensure that project stakeholders will solve problems within the corporate strategic framework. During this process, special attention should be paid to distinguish the contradictions of the enterprise and the contradictions of the business owner. In order to avoid short-term effects of the project, the project governance personnel should link the project to solving the contradictions of the enterprise rather than the contradictions of the business owner. Even in private enterprises, in spite of a certain degree of integration, enterprises have their own legal independence and growth independence from business owners. Many governance related issues derived from mixing enterprises with business owners. Similarly, many government policies focus on short-term benefits due to a lack of clear differentiation between the performance of government officials and the performance of government. The project is temporary and unique whereas the strategy is long-term and relatively stable. As a result, strategic issues at the project level are largely overlooked. In the case of relatively stable market, the project forms part of normal operation of the enterprise therefore there is no need of attention to the strategies at the project

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level. Similarly, in the event of small market, there is a lack of conditions for launching multiple projects at the same time. In such context, the project is only undertaken to fulfill temporary needs therefore there is no need to pay special attention to the strategies at the project level. However, in the context of dramatic changes in society and markets, projects are playing an increasingly important role within the enterprise, between enterprises, between industries, and between countries. In such circumstance, the dynamic cooperation between strategy, campaign and tactics at the project level will become increasingly important. It is inevitable that the growth of any enterprise is affected by policies or political factors. Therefore, enterprises have a deal with certain officials that represent the government. Meanwhile, all governments need the support of enterprises. This is because enterprises are the organizations that can meet citizens’ demands of goods most efficiently. Therefore, it is difficult to have a pure market economy. Both the government and the enterprise are open systems. Indeed, the interaction between government and enterprises plays a critical role for a country or region to maintain vitality and sustain development. It is difficult to deal with the relationship between government and enterprises as we often make mistakes by equaling the government representative (government official) to the government. The enterprise must consider the value needs of the government. However, the enterprise cannot mix the needs of the government with the needs of government officials. PPP model is very popular in China at the moment. It is especially important to distinguish the value of PPP from the contradictions that government officials need to resolve and consequently to improve their political performance. Strictly speaking, the PPP is a collaborative procurement model for undertaking projects as well as the operation of project outcomes. It is not appropriate to simply equal “PPP” to “PPP project”. Otherwise, it will result in the confusion between the contradiction that needs to be solved for PPP and the value of PPP. The value of regarding PPP as a collaborative procurement lies in discovering and solving long-term contradictions in a certain field. This long-term relationship will be related to the life cycle of PPP. By contrast, by regarding PPP as “PPP project”, it is easy to fall into the trap of resolving the government official’s political performance or short-term regional conflicts. It is mandatory that the person in charge of the project will bear the life-long responsibility of its outcomes. However, a typical PPP project will take a few decades from the approval to the termination of operation. During this period, there will be a large number of factors related to social development, technological development and overlapping of responsibilities that are hard to predict. Therefore, it is actually not feasible to implement such “lifetime responsibility system”. There are constraints to the project scope and project schedule. However, the project results have long-term impacts on the enterprise. Zhongyong oriented strategies could be adopted to balance this time constraints and long-term needs by classifying the responsibility of project stakeholders. For instance, it is the responsibility of the project management team to ensure the functionality and quality of the project deliverables with the project scope and project schedule. Meanwhile, it is the responsibility of the project governance team to fulfill the long-term value of the project and to develop the implementation strategy of the project process. We emphasis “team”

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rather than “personnel” is because the project results are mostly obtained by the project team rather than the individuals. Similarly, it is easy for individuals to leave the project or enterprise. By contrast, as a collective and the representative of an organization, the “team” is able to maintain relative stability and maximize the value cycle of the project. For PPP, it is also necessary to clarify that “Public”, one of the crucial partners, is a government department rather than a government official. In the event of emerging problem in future cooperation, it is necessary to locate a stable government department that can recognize responsibility. It should be avoided that the responsibility is assigned to specific officials with short tenure.

Opportunities Missing Due to the Conservative Attitude to Discover the Secret Information in the Taiji Stage According to Taiji Logic, the best timing to resolve the contradiction lies in the Taiji stage. At this stage, the contradiction has already appeared, but has not yet become clear. The two parties of the contradiction have a sense of the differences. However, they still hope to work together to resolve the contradictions and strive for the satisfaction of both parties rather than taking extreme measures when the contradiction has been intensified. Theoretically, Taiji stage is the best stage for resolving conflicts, because it is easy for two parties to move in the opposite direction. However, in most cases the contradictions are so subtle that it is difficult to solve them by scientific methods. Specifically, the unity of opposites (Yin and Yang) can easily lead to blur boundary, ambiguity, sophistry, indecision, and excessive compromising. Similarly, it could also lead to various management issues such as lack of consistency, lack of mutual trust amongst project stakeholders, etc. In particular, the understanding of the Taiji stage is highly artistic, relying heavily on the ability of decision makers to judge information. As a result, the effect of decision-making and action will vary from person to person. The Chinese people emphasize the leadership art. This is why good emperors, officials and generals have been relied on for thousands of years. Chinese dialectical logic does not pay attention to the analysis of statistical data. Comparatively, Chinese dialectical logic places focus on the particularity of the development of things rather than the universal law. This excessive dependence on people will result in risks and imped the overall development of science and technology. Project success will be jeopardized by excessive demands on decision makers’ own morality and ability, excessive proportion of management costs to the total costs, missed opportunities in decision-making processes, and arbitrariness of decision makers. The army of Qi invaded our State, and the duke was about to fight, when one Cao Gui requested to be introduced to him. One of Gui’s fellow-villagers said him, “The meat-eaters (people with power) are planning for the occasion; what have you to do to intermeddle?” He replied, “The meat-eaters are poor creatures, and cannot form any far-reaching plans.” So he entered and was introduced, when he asked the duke what encouragement he had to fight. The duke said, “Clothes and food can give people stable lives, but I do not dare to

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monopolise them:—I make it a point to share them with others.” “That,” replied Gui, “is but small kindness, and does not reach to all. The people will not follow you for that. “The duke said, “In the animals, the gems, and the silks used in sacrifice, I do not dare to exaggerate their numbers:—I make it a point to be sincere.” “That is but small sincerity; it is not perfect:—the Spirits will not bless you for that.” The duke said again, “In all matters of legal process, whether small or great, although I may not be able to search them out thoroughly, I make it a point to decide according to the real circumstances.” “That,” answered Gui, “bespeaks a leal-heartedness:—you may venture one battle on that. When you fight, I beg to be allowed to attend you.” The duke took him with him in his chariot. The battle was fought in Changzhuo. The duke was about to order the drums to beat an advance, when Gui said, “Not yet;” and after the men of Qi had advanced three times with their drums beating, he said, “Now is the time.” The army of Qi received a severe defeat; but when the duke was about to go after them, Gui again said, “Not yet.” He then got down, and examined the tracks left by their chariotwheels, remounted, got on the frontbar, and looked after the fleeing enemy. After this he said “Pursue;” which the duke did. When the victory had been secured, the duke asked Gui the reasons of what he had done. “In fighting,” was the reply,” all depends on the courageous spirit. When the drums first beat, that excites the spirit. A second advance occasions a diminution of the spirit; and with a third, the courage of the army exhausted. With our spirit at the highest pitch we fell on them with their spirit exhausted; and so we conquered them. But it is difficult to know Qi since it is a great State;—I was afraid there might be an ambush. I looked therefore at the traces of their wheels, and found them all-confused; I looked after their flags, and they were drooping:—then I gave the order to pursue them.” Zuo Zhuan: Cao GUI debate

Strategies of the Warring States is the best example that the timing of contradictions varies from one person to another. The analysis of the evolution trend of the same contradiction could be entirely different, although all these analyses are self-explanatory and influential to the decision-making. For example, both Su Qin and Zhang Yi had advocated the importance of “Lian Heng” strategy. However, the results were entirely different. Zhang Yi was appointed as the prime minister whereas Su Qin received nothing. It was due to the main contradictions that Qin state was experiencing rather than the lobbing power of these two strategists. In other words, it was the best time for Qin state to adopt “Lian Heng” strategy when Zhang Yi was lobbing. In Chinese cooking methods, “duration and degree of heating” is the most challenging yet very crucial component. In the Chinese restaurant, the chef plays a critical role. In the Chinese cookbooks, there are many expressions that are according to chef’s personal judgment such as “adding a little bit of salt”. Similarly, the terms of “feeling” and “taste” rely on chef’s personal judgment. As a result, the Chinese cooking becomes an art. As a result, a chef should be highly talented in cooking first and then reach a higher level after practice. These are the origins of “hard to secure talents” and “people-oriented“. In the history of China, there are many mystical decision makers. For example, Zhuge Liang was commented by Lu Xun as “Zhuge is almost a demon.”4 In Chinese 4 See

Lu Xun’s “History of Chinese Novels”.

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classical novels, “observing astronomical phenomenon at night” has become a common decision making approach by top talents. There are three fundamental reasons for keeping a secret and deliberately causing information asymmetry: (1) to protect yourself. “Master will lose the job if all skills have been passed on to apprentice” reflects the reason why personal skills are kept as secret. Similarly, it is common not to show everything to avoid in an awkward situation; (2) to improve the authority of yourself by means of mystery. In ancient times, emperor always kept distance from his ministers. In morden time it is common to have a lot of meetings for noting. The purpose is to hide information so that a sense of fear or worry is created and the uniqueness of administrator can be increased; and (3) to protect the confidentiality of strategies. There is reason for chaos. The common source of chaos is words. If you talk inadvertently, you will lose your trust in the courtiers. If you speak inadvertently, you will be plagued by disasters. If you are not carefully with important things, it will cause harm. Therefore, gentlemen must be careful when they talk about things, and they will not talk indiscriminately. I Ching: Hsi Tzu

It has become a crucial survival skill and professional competency to be able to figure out the true intention behind the superior’s instructions. However, a number of challenges exist when such communication art is applied in temporary projects and various stakeholders from different cultural backgrounds and interests. There are always driving forces to the contradiction. Indeed, a contradiction is a combination of related events. The appearance of Taiji stage will go through an evolutionary process. In the era of change and uncertainty, it is a contradiction itself to discover and seize the Taiji stage on a timely and reliable manner where contradictions will be solved. Similarly, the solution to this contradiction could be located through adopting the Zhongyong oriented strategy. It is a gradual process from Wuji (relative harmony) to Liangyi (intensified contradictions). Despite being relatively short, this process is still a stage rather than an absolute mutation. Therefore, we should abstract two variables from the system that represent the contradictory relationship between Yin and Yang, and consequently monitor them. As a result, the evolution trend of the implicit contradictory relationship can be identified. Hostile armies may face each other for years, striving for the victory which is decided in a single day. This being so, to remain in ignorance of the enemy’s condition simply because one grudges the outlay of a hundred ounces of silver in honors and emoluments, is the height of inhumanity. One who acts thus is no leader of men, no present help to his sovereign, no master of victory. Thus, what enables the wise sovereign and the good general to strike and conquer, and achieve things beyond the reach of ordinary men, is foreknowledge. Now this foreknowledge cannot be elicited from spirits; it cannot be obtained inductively from experience, nor by any deductive calculation. Knowledge of the enemy’s dispositions can only be obtained from other men. The Art of War: The Use Of Spies

Zhuge Liang always had something up his sleeve because he had a capable intelligence team. To perform well in project governance, it is necessary to have a dedicated

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department or personnel to collect and analyze relevant data. Every project is unique. Therefore, it is not appropriate to simply copying the experiences accumulated from other projects. However, there are many projects of the same type within a company. In particular, there are many opportunities for the mutual learning of knowledge and experience within the project clusters. Therefore, it is crucial to strengthen the statistical analysis of the basic data of various projects in order to identify the trend within the enterprise. If attention is not paid to the collection and statistical analysis of the basic data, the decision making in the project will be purely experience oriented. It takes time to deal with this issue. Therefore, the company should make great efforts to collect and analyze data. With sufficient data in place, the statistical law of the basic data can be found which provides significant support to decision making. It is necessary for companies to build a data platform that can be called a “digital neural system.” There are two aspects of “digital neural system”: Numbers are only useful when they are connected. The isolated numbers are not of much value; he data needs to be updated in real time, and it can respond quickly like the human neural system. With this data platform in place, managers can clearly see the real-time and real information of every operation of the company from their own terminals as needed. These include the status of everyone’s daily work as well as the project. The progress of each activity can be updated on a daily basis. Similarly, the system can automatically generate various statistics and analysis according to specific needs. This kind of data platform will greatly support the scheduling, distribution, evaluation and early warning of project resources at the enterprise level. Project management is a typical system management and a typical change management. A project involves hundreds of interrelated activities. As a result, changes in the duration, resources, and budget of an activity will have a ripple effect on the entire project and even at the enterprise level. One of the laws governing project management is “the devil is hidden in the details”. Project managers and senior management must be able to determine the focus of the work based on a comprehensive understanding of the changes in the various project activities. Similarly, because the project team members play different roles, it is crucial that they can understand the contribution of their work towards the project goals. This cannot be achieved by simply encouraging them to be more responsible to the project or solely relying on the evaluation mechanism to force them to share responsibilities. Rather, we should allow project team members to intuitively see the dynamic relationship between their work and project goals. Even an experienced project team could make mistakes of missing the overall picture. The potential reasons are: they do not have a full understanding of every component of the project, and they cannot visually and intuitively understand the relationship between the various components of the project. Therefore, it is imperative to visualize the project operation so that assistance is provided to project team members to solve these problems. Speed is the opponent of change. We cannot fully predict the trend of social change, and therefore cannot guarantee the contradiction can be dealt with in the Taiji stage. What we can do is to improve our response speed. The project is temporary by nature. In this context, “temporary” not only has the meaning of time period, but also implies the challenge of starting time. Countless companies will be rushing for a good

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business opportunity. In the information age, it becomes increasingly difficult to keep confidential. As stated in Taiji Boxing Theory, “no releasing and resisting directly”. For enterprises, it is better to speed up than to keep confidential information. The connection of discrete data with short enough intervals will facilitate the curve-fitting for the trend of changes. This will lay the foundation to improve the response speed. There are two ways to keep confidential information. The first approach is to keep secrets in the hands of a few people. This is a common practice. However, there are three weaknesses associated with this approach: (1) It is no longer a secret if those small number of secret owners have compromised; (2) Multiple stakeholders are required to work together. The lack of information will lead to a lack of coordination which will increase the management cost; (3) Too many secrets in the hands of a few people will make it difficult to accumulate knowledge. As a result, the enterprises will suffer significant losses from employee turnover. Another approach to keep confidential information is to change the ownership of secrets from people to system. The advantage of this approach is that the secret will always belong to the enterprise unless someone else takes the entire system, including the environment in which the system is based. The open secret is the secret that is most difficult to be used. For enterprises, such open secret is the project governance platform and its operating mechanism.

Zhongyong Oriented Flexibility Will Likely Weaken the Principles Zhongyong is the fundamental of Taiji logic to resolve contradictions. In Zhongyong oriented strategy, contradictions are resolved via a non-linear approach. For instance, replacement approach could be used to avoid contradictions, thus enhancing the unity of opposites. The nonlinear Zhongyong approach will result in a gradual evolution rather than a radical innovation. In Chinese culture, the straightforward approach of “only examining where patients felt painful” is considered to be low-level. On the contrary, the approach with many twists and turns is considered to be very wise. This is closely related to Chinese people’s sense of self-protection. In the Tao Te Ching, Lao Tzu puts forward that “I have three precious things which I prize and hold fast. the first is gentleness; the second is economy; and the third is shrinking from taking precedence of others.”5 Han Feizi provided the explanation as: “If you do not presume to be first in the world, all your undertakings will be undertaken, all your achievements will be achieved, and your opinions will inevitably prevail over the age. Though you desire to be free of high office, would it be possible to realize such a desire? To occupy a high office is called “being a leader in completing affairs.” Thus it is said: “It is 5 See

Laozi, “The Sixty-seventh Chapter of the Tao Te Ching.”

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because you do not presume to be first in the world, that you can be a leader in completing affairs.”6 Indeed, the most common Zhongyong oriented approach to resolve contradiction is the conservative improvement strategies. The improvement oriented reform is easier to be accepted by others and therefore is safer. Taiji Chuan originated from the Taoism. The punching path of Taiji Chuan is an arc, and its movement law is reflected by the circle. The arc movement is actually weighing the other’s strength, in order to give timely countermeasures. Consequently, it is easier to achieve high level of flexibility. The so-called Zhongyong strategy is similar to the arc movement. For instance, everything is assigned priorities, and flexibility is allowed for everyone. In the process of gradual evolution, satisfactory results can be achieved for everyone. As the changes to both parties of contradiction are gradual, they are more likely to be accepted. In some cases, both parties even did not feel that they have been changed. This is “the national affairs are all in perfect order at the same time. the people all said, ‘we are as we are, of ourselves!’”7 stated in the Tao Te Ching. It is not unusual that the Zhongyong oriented strategy is mixed up with compromise, weakness, and ideology ambiguity. Due to its non-linear nature, the Zhongyong strategy is hard to be understood. This is different from the three laws in formal logic. Formal logic is basically a linear way of thinking. One is one, two is two. According to formal logic, everything is either black or white, one or the other. There is clear judgment of everything and the communication is relatively straightforward. By contrast, Taiji logic classifies everything into three categories, i.e. grey, black and white where the grey dominates. The Zhongyong principle in Taiji logic aims to locate solutions to contradictions in this grey area. In the Zhongyong oriented strategies, straightforward approach will be the last resort. More effective methods include: repeated attempts, turns and twists, and leading by the general trend. When good government prevails in a state, language may be lofty and bold, and actions the same. When bad government prevails, the actions may be lofty and bold, but the language may be with some reserve. Analects of Confucius: Xian Wen Therefore, the superior man honors his virtuous nature, and maintains constant inquiry and study, seeking to carry it out to its breadth and greatness, so as to omit none of the more exquisite and minute points which it embraces, and to raise it to its greatest height and brilliancy, so as to pursue the course of the Mean. He cherishes his old knowledge, and is continually acquiring new. He exerts an honest, generous earnestness, in the esteem and practice of all propriety. Thus, when occupying a high situation he is not proud, and in a low situation he is not insubordinate. When the kingdom is well governed, he is sure by his words to rise; and when it is ill governed, he is sure by his silence to command forbearance to himself. Is not this what we find in the Book of Poetry,-”The one who is intelligent and prudent can protect themselves?” Zhongyong: Chap. 27

6 See

Han Fei’s “Interpreting Laozi’s philosophy”. Te Ching: Volume One”.

7 “Tao

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Since the way to resolve contradictions will go through turns and twists, it will not be straightforward in terms of communication. This will result in difficulties for others to understand. This is especially the case a number of stakeholders are involved. Some stakeholders may seem not to have direct relationship with the project. It will be inevitable these stakeholders feel that they have nothing to do with the project. Zhongyong oriented approach requires sufficient time for the various parts of the system to evolve gradually. When various parts eventually come together into a complete system, the path dependencies of various steps of the solution can be identified. Unfortunately, the project is constrained by time and stakeholders participate in the project dynamically. As a result, this “turns and twists” Zhongyong strategy is easily leading to confusion. Similarly, communication costs will grow and synergy efficiency will decline. In particular, after many turns and twists, it is very likely that the proponents of the strategy are lost themselves. Zhongyong approach is characterized by a higher level of flexibility, focusing on harmony and contradiction orientation. As a result, it may lead to misperception that Zhongyong approach is lack of principles. In fact, a clear definition is provided in “Zhongyong”, i.e. “Being without inclination to either side is called ZHONG; admitting of no change is called YONG”. “Admitting of no change” is to adhere to the principle, i.e. adherence to the project value. “Never forget why you started, and you can accomplish your mission”. The flexible strategy of the Zhongyong approach is the limited degree of freedom within the strict principles. In addition, the commitment to the project value is the cornerstone to reach a consensus among project stakeholders and consequently to locate a Zhongyong oriented solution. The fundamental value of project governance and project management is to provide guarantee for mutual trust between stakeholders. Compared with “income” and “cost”, “value” and “trust” are the keywords to ensure project profit, and the fundamentals to project governance and project management. A project is a trading platform in which its stakeholders exchange value to meet their respective needs. The partnership between stakeholders is a value-trust relationship. Meanwhile, and the profit is the dividend for the transaction costs and cooperation value obtained by the trustee. The contract is not sufficient to guarantee trust between stakeholders. The purpose of contract is to encourage cooperation and to protect everyone’s interests. When the contract can’t solve the problem of trust, we will turn to friendship or loyalty. This is the reason of “accomplishing a project and making a group of friends”. Information asymmetry bears the main responsibility for the mistrust between stakeholders. The relationship between any pair of project stakeholders can be seen as a unity of opposites. Strategy plays a crucial role in the process of establishing and maintaining relationships with each other. However, we should use more “strategies” than “conspiracies”. “Conspiracies” take advantage of the defects of the other system, while the “Strategies” rely on the continuous improvement of its own system. “Conspiracies” lead to information asymmetry whereas “strategies” are based on information symmetry. Another cause of mistrust between stakeholders is the confusion between cost and extension of expenses. Project cost is an integral part of project value. It is a common approach “to secure benefit from reducing cost”. It seems that

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reducing costs will inevitably lead to more profits. However, the common result is that the quality of project works are suffered due to the lack of rational expenditure. As a result, the enterprise did not receive more benefits. Rather, it suffered from a significant losses due to quality issues. Therefore, the key to secure the maximum profit within the specified contract amount is to control the project cost, especially those non-essential expenditures due to the poor management. The level of mutual trust can be improved by proving the necessity of project cost. It is not easy at all to develop mutual trust between people. This is especially the case for project stakeholders with a short duration of cooperation. Project stakeholders are suppliers and demanders that are mutually valuable to each other. Similarly, they are red and blue parties that play offensive and defensive roles. There is an old saying that competition in business is similar to battlefields. Compared to military strategies (i.e. zero-sum competition), project cooperation seeks to increase the value together and thereby obtaining profits. Distrust is likely to be exacerbated if each party overly emphasizes its own benefits. As a result, the mutual cooperation will be replaced by zero-sum competition. No one wants to be regarded as a fool. Such mentality will result in vicious circle of such competition. The term “value” is not absolute or objective. Rather, it is a subjective utility that is generated in relation to human needs. Stable values are especially important in societies that are constantly changing and difficult to predict the future. Our actions need to be agile, but our values need to be rock solid. Only when our values are consistent, can we perceive the tiny changes in the world. Consequently, we can foresee the coming of the hurricane from the tiny vibrations of vegetation. Similarly, we can seize the opportunities and achieve the goal of “only peace of mind can help someone to achieve something really lasting” and “deliberate in counsel, prompt in action” with high level of agility. If our values are erratic with changes in the outside world, we will spend precious time resources on all kinds of illusions even if we try our best to catch up with the rhythm of change. The result is that we are exhausted and rushed into a mess. The corporate strategy in a changing environment is similar to the strategy of guerrilla warfare. It needs to change not only according to changes in the overall situation, but also with changes in the status of individual guerrilla campaigns (programs) and even guerrilla warfare (single project). Mao Zedong, a master of guerrilla warfare, set the educational policy for the Anti-Japanese Red Army University (later renamed as the Chinese People’s Anti-Japanese Military Political University) to be “a firm and correct political direction, an abstemious and simple work style, flexible strategy and tactics”. This policy recognized the critical role of flexibility in not only tactics but also strategies. Only the political direction has to be firm. Similarly, for companies, only values need to be firm whereas strategies and projects should be flexible. We use different epistemologies to see the world. Similarly, the way we understand and transform the world is subjective. This leads to not only the diversity but also troubles and contradictions. In his “Dialectical Materialism (Teaching Outline)”, Mao Zedong repeatedly emphasized that “dialectical materialism is the proletariat’s

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view of the world.”8 It can be observed that materialist dialectics is from proletarian’s perspective and serves the proletariat. Similarly, Taiji logic provides a useful tool to managers who are in relatively weak position. These managers cannot overwhelm resolve conflicts with their limited resources and power. With this in mind, we can understand the value of Taiji logic for project governance personnel and project management personnel. For project management personnel and even project governance personnel, they are forced to resolve contradictions by adopting measures at the least cost and with the best timing. These measures include: adopting the specific analysis method as per contradiction; using the “turns and twists” approach; and employing replacement measures. This is due to significant challenges such as: (1) uncertainty associated with the environment and project risks; (2) the limitations of the responsibility boundary derived from the temporary nature of the project; (3) authoritative limitations as knowledge needs to be sought from various disciplines to complete the project, and (4) the lack of exchangeable resources owned by the project governance personnel and project management personnel. This is not only the value of but also the challenge to the Taiji logic. Management is a flawed beauty, so is the logic people used to perceive the world. Taiji logic cannot replace form logic, dialectics and other epistemologies that explain the world. Similarly, other logics cannot replace Taiji logic. “To see a world in a grain of sand, and heaven in a wild flow”. Roles and responsibilities are different when in different kind of worlds, causing people to employ different logics.

Lin Shaopei, China, Professor of Shanghai Jiaotong University, Director, Global Accreditation Center (GAC) for Project Management Education Programs, Project Management Institute 8 Mao Zedong’s “Dialectic Materialism (Teaching Outline)” was written in 1937 and was serialized

in the 6–8th (April to June 1938) of the “University of Anti-Japanese War”.

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The objective world is full of contradictions. Using Taiji concept the unification of two opposites for finding the contradiction; Based on Taiji diversification concept for catching the opportunity of solving contradiction and by Taiji balancing two opposite sides for problem solving. However, these basic principles cannot be implemented rigidly, it needs “softening” the strategy for accommodating to the VUCA reality, upon which, both Project Management (PM) and Project Governance (PG) are integrated. Under VUCA era, PM is essentially managing “changing” for rising efficiency and the probability of success; PG is essentially catching the opportunity for establishing new sophisticated game rules. As a matter of fact, the treatment of most complicated man-man relation needs Taiji for problem solving. In the digital world, it means “softening of theorem and hardening of knowledge”. Under VUCA era, the inequality 1 + 1 = 2 always exists. However, it can be presented by 1 + 1 = 2 + ∈ (t), where ∈ (t) represents a small number and is a function of time t. In reality, the maneuvering of Taiji is just the treatment for the small variable ∈ (t). We recognize there is a changing world, but the only thing which remains “unchanged” is “changing”. One who is facing changing world, but is keeping Taiji in one’s mind, insisting “unchanging” toward the “changing”, will deem to be succeeded.

Index

A Administrative talent, 70, 87, 89–91, 102 Analects, The, 93, 97, 103

C Collaboration, 19, 34, 68, 78, 92, 97, 125, 139, 140 Confucius, 5, 8, 12, 55, 93, 97–98, 103, 139, 151

D Deprojectization, 121, 123–124 Dialectics logic, 4, 6–7, 9

E Empowerment, 103, 105, 135, 138 External contradiction, 35–36, 38, 40–41, 45–46, 51

F Formal organization, 57, 65, 93, 95, 97 Form logic, 1–4

G Governance role, 63, 107, 113, 130–131 Guanzi, 36, 38–40, 44, 53–54, 68, 84, 88, 92–93, 95, 109, 116, 117, 132, 135

H Han Feizi, 51, 61, 104, 150

I I Ching, 4–6, 8, 16, 131, 148 Informal organization, 65, 93, 95, 97–98 Intangible resource, 15, 98, 100 Internal contradiction, 35–36, 38, 45, 51

L Life cycle, 84–85, 103, 111, 126, 143, 145 Long and Short Sutra, 1, 8, 79

M Mencius, 8, 14, 40–41, 93, 117

P People-oriented, 87–88, 136, 147 Private interest, 51, 53, 55, 57, 59–60, 64, 99 Productive force, 67–68 Professional ethic, 26, 60, 67, 77–79, 83 Project decision, 19, 23, 25, 30, 32, 51–54, 58, 60, 62, 64, 100, 111 Project governance, 19, 25, 27–35, 41, 55– 57, 62–63, 65, 67, 77, 80, 101, 103– 104, 107, 112–115, 121, 123, 125, 130, 135, 138, 140, 144–145, 148, 150, 152 Project governance platform, 121, 135, 150 Projectization, 121, 124, 126 Project Management Office (PMO), 129 Project management team, 67–70, 145 Project objective, 53–54, 57, 89, 112, 128– 129 Project opportunity, 35–39, 41–42, 44, 46– 51, 78, 101, 125

© China Electric Power Press and Springer Nature Singapore Pte Ltd. 2020 R. Ding, Taiji Logic, https://doi.org/10.1007/978-981-15-5239-7

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158 Project performance management, 103–105, 107 Project resource, 29, 87, 97, 100–101, 122, 127, 130, 149 Project risk, 24, 59, 106–108, 112, 118, 154 Public interest, 51, 53–55, 57, 60, 90–91 Public-Private Partnership (PPP), 19–23, 33–34, 49, 64, 101, 123–124, 145, 146

R Relation of production, 67–68, 88–89 Romance of the Three Kingdoms, 39, 43–45

S Seeking truth from fact, 109–110, 141 Shi, 9–10, 12, 42–43, 46 Stakeholders’ demand, 49, 51–54, 57, 60, 62, 64 Strategies of the Warring States, 7, 80, 109, 147

T Taiji logic, 1, 11–13, 16–18, 26, 32, 34, 46, 62, 141–143, 150–151, 154 Tangible resource, 98, 100, 118 Technological talent, 87, 89–91

Index Thirty-Six Stratagems, 9, 44

U Unity of opposites, 9–10, 13–14, 19–20, 32, 36, 54, 59–60, 64–65, 67, 87, 88, 90, 99, 101, 103, 111, 115–116

V VUCA, 18, 50, 52, 56, 101–102, 124, 137, 155

X XunZi, 14, 73, 93, 141

Y Yin and Yang, 5–6, 10–11, 13, 15, 16, 40, 67, 85, 88, 94, 98–99, 101, 103, 111, 113, 115, 117, 124, 131, 141–142, 146, 148

Z Zhongyong, 12, 15–16, 32–33, 55, 61, 64, 97–98, 100, 109, 128, 141–142, 145, 148, 150–152