Clever Geek Handbook
5 July 2025

Making Sustainability Work

Recommendation

Management professor Mark J. Epstein conducted extensive academic research into the best social and environmental – that is, sustainability – practices of 100 companies worldwide. Drawing on that knowledge, he developed a “Corporate Sustainability Model” to show business leaders how to implement the right organizational processes to create, measure and promote corporate social responsibility (CSR) and “corporate social opportunity.” The book is quite dense and academic, with much of its information packed into evocative but complex charts, so it seeks a professional audience. BooksInShort recommends it to corporate decision makers as a well-informed, thorough manual.

Take-Aways

  • Corporate social responsibility, good environmental practices and financial profitability are not mutually exclusive.
  • Sustainability drives profits and is integral to strategic planning.
  • Companies often begin sustainability programs to comply with regulations.
  • They continue such programming to gain an edge and to reap social, economic and environmental advantages.
  • The “Corporate Sustainability Model” identifies, measures and integrates a firm’s social, environmental and financial processes and results.
  • A corporate culture should support sustainability in its day-to-day decision making.
  • Accurate data measurement fuels all sustainability initiatives.
  • Performance data help you make better decisions about allocating your firm’s resources.
  • Improved sustainability generates documented payoffs in profits, customer satisfaction, operational resource yield and organizational improvement.
  • The effects of sustainability will take time to appear, but they are worth it.

Summary

Improving Social and Financial Performance

Corporate social responsibility (CSR) enables companies to ensure that their social, environmental and economic activities support the “triple bottom line” of sustainable performance. Businesses must assess their CSR activities to make the most of these “unpriced” activities, and to turn them into a competitive advantage. Sustainability programs must address government regulations, industry codes of conduct, community relations, costs and revenue goals, and societal and moral duties.

“The Corporate Sustainability Model describes the inputs, processes, outputs and outcomes necessary to implement a successful sustainability strategy.”

Many companies implement sustainability strategies, but their efforts often fail because sustainability demands simultaneous excellence in three overlapping arenas: social, environmental and financial performance. Corporate sustainability requires a clear strategy based on goals that supersede dollar-driven profits and the full commitment of senior management. It also calls for practical systems that implement sustainability companywide. Corporate support must come from “management control, performance measurement and reward systems as appropriate.” To measure performance, first consider how well you perform in nine basic areas: “ethics, governance, transparency, business relationships, financial return, value of products and services, employment practices, protecting the environment,” and economic and community development.

Implementing Corporate Sustainability

Companies usually take on and achieve sustainability goals in three stages:

  1. Complying with regulations – Companies have no choice in this area; they must obey the law. Regulations are often the impetus behind sustainability initiatives.
  2. “Achieving competitive advantage” – This is necessary if you want your business operations to make a profit.
  3. “Social, economic and environmental integration of sustainability practices” – Embrace the responsibility of sustainable operations as a best practice beyond the mandates of government or competition.
“Four main reasons why sustainability...demands our urgent attention [include] regulations, community relations, cost and revenue imperatives, and societal and moral obligations.”

Your constituents (stockholders, consumers, vendors, workers, “regulators and communities”) care about your sustainability practices. To meet their expectations, you must make business decisions that account for the current and future environmental impact of your products, services, processes and activities. Your leadership challenge is to integrate sustainable environmental practices profitably into your firm’s daily decision making – from the factory to the boardroom.

Using the “Corporate Sustainability Model”

This model gives companies a tool for assessing the business impact of their sustainability practices. It permits managers to interpret the reasoning, activities and metrics involved in implementing a companywide sustainability strategy. Using this model provides you with a way to establish accountability, which is crucial to reporting, management, performance and governance.

“Social and environmental impacts must be included in ROI calculations and managerial decision making at all levels.”

Identifying, evaluating and improving your firm’s social, environmental and economic impact call for accountability in every area of your operations – from product design and cost to capitalization, information management and execution. Accountability begins with each person and department. Every staffer should be proactive about carrying out the firm’s commitment to sustainability as a core value. And each department should assess its contribution in every area. To that end, this model analyzes four areas of business practices necessary to “implement a successful sustainability strategy”:

  1. “Inputs” – What does your company contribute to sustainability in terms of staff and financial resources? Is your business environment conducive to meeting environmental goals? Maintain open communication across hierarchies and departmental silos to foster the information flow needed to make and execute critical sustainability decisions.
  2. “Processes” – Corporate leaders should establish principles and practices that “institutionalize the concept of sustainability.” The board and CEO must develop a sustainability strategy, allocate the necessary resources, and steer appropriate programs and initiatives through the organization. Along with its leaders’ commitment, a company needs the right “structures, systems, performance measures, rewards, culture and people” to execute its sustainability strategies.
  3. “Outputs” – This category of business practices covers the “corporate cost/benefit of actions” for sustainability. It includes stakeholder reactions and sustainability performance (which “may be both an output and an outcome”). When focusing your sustainability activities, consider your organization’s culture, your competitive position and your environmental performance. Factor in regulations, market considerations and geographic conditions. Global businesses must align their overall sustainability strategies with the realities of their operating structure, be it centralized – with less local autonomy – or decentralized – with more local autonomy. Seriously consider all the associated risks and benefits before outsourcing sustainability functions to external providers.
  4. “Outcomes” – What feedback do you receive on sustainability issues? What are your marketplace results? Strong sustainability leads to better product design, production efficiency and good customer service, all of which result in higher profits, increased customer and employee retention, and greater social and environmental benefits. Help your company understand the direct connection between improved sustainability performance and improved financial performance.

“Costing, Capital Investments and the Integration of Social Risk”

The management tools that can help you assess the way you incorporate sustainability programming into your overall strategy include:

  • Capital investment decision systems – Some 84% of companies fail to consider social and political risk when they make spending decisions related to sustainability, though such risks affect many areas, including product quality, workload capacity, productivity, innovation, cost and revenue.
  • Costing systems – Rather than using traditional discounted cash flow analysis, some companies achieve better social and environmental cost accounting by using activity-based or life-cycle costing. Firms that use full-cost accounting to evaluate sustainability projects can make simple changes to identify and eliminate environmental expenses and to develop better pricing and customer value.
  • Risk assessment systems – Identify and quantify background sources of risk. What is the possibility of environmentally related social and political risks actually coming to fruition? Keep this concern in mind as you make decisions.

Performance Evaluation

Building a culture of sustainability requires the right corporate setup, from your leaders’ commitment to your “organizational structure and rules, systems, communications, performance measurement, and incentive structure.” As you coordinate these factors, measure your firm’s individual and group sustainability performance with tools like these:

  • Performance evaluations – Appraise your sustainability program’s results at the corporate, business unit and individual levels.
  • Incentives and rewards – Recognize excellence, and offer incentives for reporting potential violations of the law or of corporate environmental policy.
  • Accountability for “internal waste” – Make each business unit responsible for its own discards.
  • “Emissions trading” – Corporate options include leasing emissions allowances, making offset agreements or balancing pollution against positive environmental contributions.
  • “Strategic management systems” – Institute administrative structures, such as a balanced scorecard, that provide genuine accountability and managerial control.

Social, Environmental and Economic Impacts

As you collect information about each phase of your sustainability activities, analyze it in financial terms so you have the information to align your corporate financial goals to your sustainability goals. Assess the factors that drive your sustainability performance, including potential risks and benefits, and appraise your social and environmental results. Advances in technology allow improved identification, collection and interpretation of data to help you make better decisions and perform more thorough assessments of sustainability-related issues. Proper evaluation will reveal the links between your firm’s activities and its performance in environmental, social and financial matters.

Strategy Adjustment

All your company’s activities – not just sustainability – benefit when managers adjust their strategies based on concrete performance indicators. Your measurement systems must include appropriate mechanisms to give feedback to managers, so they can promote knowledge sharing and continuous learning. Feedback allows managers to check their assumptions about earlier plans and to modify them for the long term. Your company can improve its sustainability performance by redesigning products, re-engineering processes, involving the members of its supply chain, rethinking markets, and using organizational learning and life-cycle analysis. Enhance your internal reporting to boost decision making and strategic planning. Use your data to show staffers the value of their contributions.

External Reports

Performance data permit you to make better decisions about allocating your company’s resources. But sustainability performance also interests your constituents. Many firms disclose and share such data in their annual reports and publish sustainability reports or online updates. Established in 1997, the Global Reporting Initiative (GRI) created “globally applicable guidelines for reporting on the economic, environmental and social performance of corporations, governments and NGOs.” The latest edition of GRI’s Sustainability Reporting Guidelines and its Sustainability Reporting Framework help firms make effective disclosures about sustainability and help stakeholders understand them. Such external reports enable better-informed decisions and give companies a vehicle for telling the world about their sustainability. If you need to verify the quality, reliability and relevance of your metrics, formally turn to independent auditors.

Sustainability Benefits

The forces that traditionally drove profitability now must balance with the forces that drive sustainability. Managers and staff should gear their day-to-day decisions toward meeting goals for both sustainability and profits. The Corporate Sustainability Model offers a working structure for delineating activities, creating relationships, and measuring a sustainability program’s processes and results, including lower operating costs, increased revenues and the fulfillment of deeply held corporate values. Improved sustainability generates several documented payoffs:

  • “Financial payoffs” – Profitability is facilitated by lower operating, administrative and capital costs, higher revenues, corporate values, and stock market premiums.
  • “Customer-related payoffs” – Consumers benefit from greater satisfaction, new products and an increased market share.
  • “Operational payoffs” – Sustainable practices can lead to innovative processes, increased productivity and “improved resource yields.”
  • “Organizational payoffs” – With the right program, expect less interference from regulators and lower operating risk, as well as happier employees.
“Recent research has shown a strong and positive link between successful sustainability strategy and corporate value.”

Success in sustainability and profitability occurs when leaders, strategy, structure, management systems, performance and continuous learning align. Even if your current efforts may not seem to affect your finances or market performance immediately, your company will feel a positive impact in the future.

About the Author

Rice University professor Marc J. Epstein is an expert in designing and implementing corporate strategies and developing their performance metrics.

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Making Sustainability Work

Book Making Sustainability Work

Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts

Berrett-Koehler,
 


5 July 2025

The Perfect Swarm

Recommendation

As its title suggests, this lively book often makes its points with humor and wit. Physicist and author Len Fisher draws on laboratory experiments, observations of the natural world, well-known historical events, contemporary cases and examples from his own life, making a complex subject accessible. His book covers some ground that will be familiar from other books on group intelligence, collaboration and the wisdom of crowds, but the material on “swarm intelligence” is new. Fisher’s numerous examples from all facets of nature provide highly fascinating case studies of group behavior. BooksInShort recommends this book to professionals in marketing and strategy, and to trainers and readers who are interested in new ways of thinking.

Take-Aways

  • As demonstrated by swarms of locusts and schools of fish, groups possess the power of “self-organization.”
  • Order can emerge out of chaos without any guiding intelligence.
  • Groups often know things that individuals don’t. This is called “swarm intelligence.”
  • Certain phenomena, such as “positive feedback” and “chain reactions,” can throw a group into chaos.
  • Conversely, “negative feedback” is a self-correcting force, which stabilizes the group.
  • A swarm has no leader, but it can arrive at its goal without knowing its destination.
  • A group uses one of three tactics to reach consensus: it can decide by majority vote, it can debate the issue until it reaches a consensus, or it can use swarm intelligence. A group as a whole outperforms its individual members in making tough decisions.
  • Similarly, a group of experts outperforms individual experts.
  • When you face many options, look for patterns in information, but test them to make sure they are reliable.
  • Decide on a solution that surpasses your expectations.

Summary

The “Science of Complexity”

Have you ever watched a swarm of insects and wondered why the individual flies do not collide? They avoid one another and work better together than they could alone because they follow certain rules. The science of complexity studies these rules, analyzing the patterns and processes of “self-organization.” These rules allow complex structures and relationships to emerge out of chaos, without any “central director” or single intelligence guiding the process.

“Swarm behavior becomes swarm intelligence when a group can use it to solve a problem collectively in a way that the individuals within the group cannot.”

Chaos turns to order at different rates of speed depending on the system: Think of the difference between the swirling pattern in your coffee after you add the cream and changes throughout an entire ecosystem following a temperature rise. Systems exhibit two types of “dynamic patterns”:

  1. “Cycles” – These sequences repeat themselves over and over, going nowhere, like a family quarrel.
  2. “Adaptive systems” – The elements in these systems adjust according to changes in circumstances, for example, when a cheering audience begins to applaud in unison.
“Crowd self-organization is an example of complexity theory, self-organization and collective intelligence.”

Certain kinds of relationships among the individual components characterize adaptive systems. Each actor responds to the actions of others. As they do, they produce “swarm intelligence,” in which the group solves problems that individuals could not. Swarms have no leaders, but members can pass information to one another through observation and rules. For example, a scientist studying how schools of fish move as a group boiled down their actions to two controlling rules: “Follow the fish in front,” and “keep pace with the fish beside you.”

“Crowds have emergent complex structures that arise from physical and social forces between individuals.”

Certain phenomena throw the swarm back into chaos. “Positive feedback” is what happens between a microphone and an amplifier: the amplifier receives an initial sound from the mike and amplifies it; the mike picks up the amplified sound; the amplifier makes it even louder, and finally the cycle results in a sound that is so loud it crashes the system. Similarly, investors who distrusted Washington Mutual withdrew their money, causing more investors to lose trust and withdraw their money, until the bank collapsed.

“Two wrongs may not make a right, but many wrongs can come pretty close.”

“Chain reactions” also cause systems to fall apart. Among locusts, biochemical triggers cause swarming: When locusts are close to other locusts they produce serotonin, which triggers group activity and more serotonin production, and attracts more locusts. This chain reaction can lead to swarms of up to 100 billion locusts. In his autobiography, American author James Thurber described a human chain reaction among the residents of Columbus, Ohio, in which one person running down the street was joined by another and another, until everyone in the neighborhood was running in the street, convinced that a tidal wave was descending upon them.

“One way to achieve consensus is to follow the example of others who appear to know what they are doing.”

“Negative feedback” balances destabilizing forces. Classical economist Adam Smith’s “invisible hand” theory says that negative feedback stabilizes prices following a period of instability or disturbance.

Flight of the Bumblebee

In city streets, humans move randomly in relation to one another until a certain population density is reached. Then, “self-organized rivers of pedestrians,” in which everyone walks at the same pace, begin to flow. Bees do something similar, swarming according to three principles:

  1. “Avoidance” – Bees don’t collide with others.
  2. “Alignment” – Rather, they move the same way as the bees closest to them.
  3. “Attraction” (or “cohesion”) – They simultaneously move toward other nearby bees.
“The idea that a critical mass of ‘early adopters’ is needed to start a cascade of acceptances isn’t just confined to crazes.”

However, bees add another complication: They can move toward a target. The bees who know the way fly straightest and fastest toward that target, and others just end up following. Experiments show that humans behave similarly. You can lead a crowd even when the crowd has no idea that it has a leader, who its leader is or what its target is. Social psychologist Stanley Milgram conducted an experiment in which he had people stand on the sidewalk and stare up at a window. If one person stood and stared, 40% of pedestrians stopped to join in. If two people stared, 60% joined, and if five people stared, 90% joined – even after the original starer left.

The Way of the Ant

Ant colonies have a problem common to many human communities: With limited knowledge, they must find the shortest route to and from scarce resources. How do they achieve this? Each ant secretes pheromones, which it deposits on every trail. The first ant to return to the colony has clearly chosen the shortest trail. The other ants alter their course and follow that trail. The shortest trail gets the most traffic and the pheromones marking it are the strongest, drawing more ants to follow and eventually turning it into an ant highway. This sort of community interaction happens among humans at the Web site Digg.com, where readers rate stories as interesting. This raises their visibility and draws more hits. Use this phenomenon to succeed in the market: If another company does what you do, only better, follow its lead and imitate it.

“When we don’t have an expert available, we must fall back on the diversity of the group.”

In many ways, people move like ants, establishing distinct lanes of pedestrians as they’re walking. At a certain population density, this establishes and maintains the flow of traffic. Above that level, traffic clogs. Individuals who attempt to go faster slow the traffic down. When you’re caught in such a clog, the best thing to do is to hang back to let the blocked path or exit clear out. However, that’s only moderately efficient. A better solution is for urban designers to take the rules of traffic flow into account, by widening crowded areas or placing pillars strategically in buildings to make people step sideways.

“Tallying is one of the simplest ways we can use a large number of cues to guide our decisions.”

In a panic, neither following nor fighting the crowd works. Instead, follow the swarm about 60% of the time and search for an alternative means of escape about 40% of the time. People caught in panics often instinctively try to find and save their loved ones. However, a better solution is first to find your own way to safety, then to look for family and friends. Making such a decision in the heat of the moment is difficult; plan emergency strategies in advance.

The Whole Is More than the Sum of Its Parts

To make decisions in a group, you can either vote or generate “some sort of average opinion” that will guide the group. Which of these methods you should use depends on the sort of question you’re trying to answer. If you’re estimating something, such as the number of beans in a jar, ask each individual to come up with a number on his or her own, then average the responses. The average will be more accurate than any individual estimate.

“If we can distinguish patterns within the depths of complexity, we may be able to use them as paths to guide us through the maze.”

In contrast, if you’re answering multiple-choice questions and the group is pretty well informed, vote and go with the majority. Studies show that a group will outperform most of its members. However, it won’t surpass the judgment of an expert trained in the field. A group of experts does even better; it outperforms a solo expert. Experts are most useful when dealing with problems at the intersection of “knowledge and initiative.”

Reaching Consensus

Groups often have trouble figuring out how to move from the many diverse opinions among their members to a decision. They have three choices: follow the will of the majority, debate the issue until they reach consensus or use swarm intelligence.

“Groupthink is everywhere, and it is especially virulent in its ability to affect our attitudes toward each other.”

Both humans and animals make decisions by doing what others are doing and following the majority – the “quorum response.” Voting is quick and easy: everyone votes, and the majority rules. However, voting is subject to the “voting paradox”: When voters have three or more choices, a minority can determine the outcome. Voting and following the crowd are vulnerable to manipulation. For example, a restaurant owner might park cars outside the restaurant to make passers-by think the place is busy. Improve the results of voting or following the crowd by adding independent action, such as gathering information.

“Recognition...can be a two-edged sword when it comes to using it as a cue to choose between alternatives.”

Debating the issue poses the danger of groupthink, in which group members reach a shared conclusion, then hold to it regardless of the evidence to the contrary. Groupthink can be exceedingly perilous; powerful groups have held onto their world views even when these endangered them or others. In groupthink, members overvalue the group’s ethics and insight. To avoid groupthink, have group members gather information independently, work through its implications and then present what they’ve discovered to the group for evaluation.

“Life is complex and...emergent patterns can’t always be predicted from simple rules, even though such rules lead to them.”

Swarm intelligence emerges when individuals spontaneously and voluntarily interact to solve problems, for example, when a business offers an innovation challenge on its Web site and people around the world respond. The collaborative reference work Wikipedia is a great example of swarm intelligence. Individuals in a swarm see themselves differently from individuals in a group. They resemble stakeholders, who wish to see the problem solved, more than shareholders, who “own” the problem. Swarms are more likely than other kinds of groups to share their power or even give it away.

Networks

Order emerges among people through networks: sets of items and connections that you can represent with dots and lines. The dots, or “nodes,” represent the individuals or items in the network; the lines represent the connections among them. Networks are either deliberately planned or completely random; most networks combine qualities of the two.

“Simple rules, patterns and formulae can often help us steer our way through, but in the end it is the complexity that rules. OK?”

Network connections are not evenly distributed. They tend to cluster according to a “power law,” so that a few nodes have many more connections than most others. These “hubs” stabilize the network; you can remove many connections and the network can still function. The links in a network can run one way or two ways.

Networks are like geographical entities, with some elements of the network functioning like isolated “islands.” Understanding the hubs and “shortcuts” that link one part of a network to another is crucial in everything from public health to marketing. For example, diseases tend to spread through hubs, so you must focus your efforts on these to prevent infection. To spread news of your new product through a network, the best way is to identify and inform the hubs. However, these well-connected few have many demands on their time. Instead, you may need to contact many people to pass your message along.

Too Much Information

You’re awash in data. It’s coming at you from all sides, all the time. How do you decipher what’s really important? Borrowing an approach from gold miners, do three things:

  1. Pick up the obvious gems on the surface.
  2. Sift through the data until nuggets emerge.
  3. Step away and “look for patterns in the unsorted mass of data.”

However, the emergence of a pattern doesn’t necessarily mean anything: Patterns emerge naturally and spontaneously in all areas of life. Check to see whether patterns are meaningful by doing experiments and evaluating them statistically.

One longstanding assumption about information – that more is better – is not always true. You can often make good, quick decisions by using “heuristics,” or rules of thumb, that simplify complex situations. Follow these five heuristics:

  1. “Recognition” – Between two choices, select the one you recognize.
  2. “Fluency” – If you recognize more than one, go with the one with which you are most familiar.
  3. “Tallying” – Quickly list the positive and negative aspects of a choice and decide on the one with the highest total. If both choices seem roughly equivalent, choose the one that will lead to your goal most directly.
  4. “Take the best” – Evaluate the characteristics of each option. Choose the option that has more of the attributes that are important to you.
  5. “Satisficing” – Opt for the solution that surpasses your expectations.

About the Author

Len Fisher, Ph.D., wrote How to Dunk a Doughnut, Weighing the Soul and Rock, Paper, Scissors. He is a visiting fellow of physics at the University of Bristol.

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The Perfect Swarm

Book The Perfect Swarm

The Science of Complexity in Everyday Life

Basic Books,
 


5 July 2025

China's Megatrends

Recommendation

Futurist John Naisbitt was never one for understatement, and that holds true with this sweeping book on China. His early works broke ground and brought provocative ideas to light. This book, written with his wife, Doris Naisbitt, is less revolutionary. With warm enthusiasm, the authors present a comprehensive, generous compilation of eight major forces shaping China. They explain China’s politics simply and straightforwardly, with a generous dose of quotes from former leader Deng Xiaoping and others. The Naisbitts’ prose style and their slogans or sayings seem to lilt with a slightly Chinese cadence and, sometimes, even sentence structure. The book is not directed at cognoscenti who seek academic or deep coverage of China’s complexities, contradictions and challenges. Instead, BooksInShort finds that it is a very accessible look at how China is evolving today, written for an interested but not expert general audience and slightly sugared with an accent on the positive. The authors praise China’s leaders – and even laud the fact that most leaders aren’t elected – and believe that criticism of China is based on misunderstandings that will clear up as the eight forces they list come to fruition over time.

Take-Aways

  • As head of state, Deng Xiaoping set the goal of economic progress and granted China’s people the freedom to determine individually how to achieve it.
  • Now, eight “pillars” are shaping China’s future:
  • First, China is ending doctrinaire thinking with “emancipation of the mind.”
  • Second, China is pioneering “vertical democracy,” a form of government that fits its culture, by “balancing top-down and bottom-up.”
  • Third, leaders frame “the forest and let the trees grow” to support both order and diversity.
  • Fourth, the Chinese take experimental risks by “crossing the river by feeling the stones.”
  • Fifth, creativity thrives as the Chinese explore “artistic and intellectual ferment.”
  • Sixth, by “joining the world,” China is reaching for its rightful international place.
  • Seventh, seeking “freedom and fairness,” China is balancing social equity and economic progress.
  • Eighth, by hosting the Olympic Games, China touted its social and economic advances, while clearly showing that it will develop its own way – not by following the West.

Summary

“Pillar 1: Emancipation of the Mind”

Eight pillars mark the rise of modern China. The first is an end to doctrinaire thinking. Deng Xiaoping, who came to power in 1978 after the chaos of the Cultural Revolution, recognized the hazards of dogma and the harm done by brutal restrictions on ideas. He inherited an impoverished China, its population forced into passivity by decades of formulaic communism. Deng began the liberation process with his support of 18 farmers who bravely risked their lives by dividing up communal land and taking individual responsibility for cultivating and selling crops.

“To Deng Xiaoping the question was not whether communism or capitalism would be best...the real question was what works and what doesn’t work.”

Widespread agricultural reforms triggered China’s emancipation, but freeing minds is a long process and China generally moves slowly. After millennia of authoritarian governments and top-down social structures, plus decades of communal property, many people felt discouraged about innovation or risk. Deng and his successors moved patiently to privatize unprofitable state-owned enterprises and build a modern financial system. The results legitimized the unelected regime. In the intervening years, China has cautiously re-evaluated Mao Zedong’s legacy. Esteemed for his undeniable achievements in bringing the People’s Republic of China into existence, but no longer seen as infallible, Mao has become a more ambiguous figure.

“[The] Chinese look at China from the background of their own history. People experience a great deal of joy and optimism about their current and future living conditions.”

By the end of the 1990s, companies in communist China were handling IPOs, and mergers and acquisitions. Foreign pundits often criticize, not entirely fairly, China’s political-economic system, but China was like a company in crisis. It needed a turnaround fast and didn’t have time to take polls. Today’s thriving market economy, freedom of thought (if not always of expression) and tempering of totalitarianism with some sensitivity to public opinion, all illustrate the magnitude of China’s strides from revolutionary indoctrination to intellectual emancipation.

“Pillar 2: Balancing Top-Down and Bottom-Up”

The Chinese are not aiming for Western-style democracy. China’s Confucian culture has always understood order’s role in preserving freedom, and China’s orderly system provides the conditions for this type of freedom. As Deng said, “It doesn’t matter if the cat is black or white, so long as it catches mice.” He meant that people should focus on practical methods that work, not just on the ideologies behind them. China is creating a new system that balances top-down direction with bottom-up communication and initiative.

“The evolving Chinese dynamic of top-down government directives and bottom-up citizen initiatives is shaping a new model we call ‘vertical democracy’.”

For thousands of years, China had a feudal, authoritarian culture that suppressed any expression of unconventional ideas. Then, in 1978, Deng gave a speech, “Emancipate the Minds, Seek the Truth from Facts, Unite and Look Forward,” that set a new direction for China’s great economic modernization. The 18 farmers exemplified this liberation, which had another important consequence: state encouragement of entrepreneurial initiative. This openness did not extend to the popular selection of leaders, which was seen as potentially destabilizing. Consider the chaos in the former Soviet Union when Mikhail Gorbachev launched perestroika. China’s leaders ensured progress within the framework of order. As elections legitimize the exercise of power in the West, getting results that benefit people legitimizes wielding power in China. People see the Chinese Communist Party’s power as legitimate because its results speak for themselves: Under its leadership, hundreds of millions of people overcame poverty. Of course, hundreds of millions are still poor, including many exploited migrant workers, but that happens in the West also.

“The overarching frame expressed as, ‘The socialist case will be crowned with victory,’ was set and has remained untouched, but within that frame the country has changed dramatically.”

The absence of voting for leaders “releases politicians from election-driven thinking and permits long-term strategic planning.” Yet China is slowly experimenting with village elections. Its emerging “vertical democracy” probably will be unlike Western democracies. As President Hu Jintao promised, “Citizens will have more extensive democratic rights,” but neither progress nor economic growth requires Western-type democracy. The government does conduct and heed surveys to solicit public input on topics such as women’s rights. The party pays some attention to these opinions. Because of public opposition, the state suspended plans to build a magnetic train between Shanghai and Hangzhou. The state also works relentlessly against official corruption.

“Pillar 3: Framing the Forest and Letting the Trees Grow”

Mao demanded uniformity. Every tree had to be the same. Diversity emerged only when Deng saw that he had to “allow variety to take root.” He encouraged different kinds of trees to grow in China, though the West wanted China to turn itself into a Western-style forest – and quickly. However, China will become its own kind of forest. Deng and other leaders have provided a framework for a Chinese forest to grow. For example, one guiding framework for individual growth is “modest wealth.” This gives the Chinese people increased freedom to prosper.

“Opening up can be experienced in all fields.”

Deng recognized the destructiveness of Mao’s “class struggle” theory and the importance of economic emancipation. China strove to double its GDP by 1990, and to redouble it by 2000. China’s economic goal for the first five decades of the 21st century is to “complete the modernization of the country.” China’s public goals are not like Western campaign promises. Among other differences, the Chinese clearly delivered. Indeed, China has exceeded its objectives for its GDP, which increased from $309.3 billion in 1980 to some $1.2 trillion in 2000.

“The constancy of the ruling political party allows long-term planning without the disruption and changing politics of thinking and acting that are focused on elections.”

What does China plan for the next century? Its framework will keep the party in power and at the forefront, but expect some political movement toward a sort of democratization of the party. On the military front, a defensive military buildup without territorial grasping “seems more than likely,” as does “peaceful national unification” with Taiwan. Economically, China will set out to become the globe’s premier innovator and to address its dire environmental challenges.

“China’s leadership has achieved remarkable results, which even harsh critics are beginning to concede.”

“Pillar 4: Crossing the River by Feeling the Stones” Deng drew on China’s legacy of strategic wisdom by setting a grand objective – economic progress – and granting people the freedom to find their own means of achieving it. Experimental pilot projects have tested innovations in law, investing, schooling and economic structures. Chinese policy makers are responding to popular demand for social-welfare assistance. They have noticed the need for rural shopping centers and have invested in improving the general shopping experience. Deng successfully established “special economic zones.” In 1979, Shenzhen, near the Hong Kong border, was a fishing village with 20,000 residents; now it is a metropolis with more than 10 million people. “Deng’s concept, ‘Let some cities get rich first,’ was a breakthrough.” China is experimenting with solutions to the problems of archaic state-owned enterprises. The Haier Group Company, a typical state-owned enterprise in 1984, is now a successful appliance manufacturer, with revenues of more than $2 billion and aspirations for global status. Its transformation is a case study at international business schools such as Harvard.

“Our intention is to base our views on facts. Our view might be colored by our positive emotions, but if so, it may serve to balance the heavily weighted negative commentary.”

China’s press is not free, but the Chinese did not invent censorship. Indeed, the U.S. once banned James Joyce’s Ulysses. The press is restricted, but diverse, and often draws sophisticated readers. Internet freedom is an issue, but the Chinese (300 million were online by 2009) have learned to use it as a bottom-up communication device to transmit ideas and suggestions to the leadership.

“Pillar 5: Artistic and Intellectual Ferment”

On the cultural front, the arts will flourish – because artists’ minds have also been emancipated. Painters no longer merely copy old masterpieces. In an emerging artistic renaissance, they are pushing the usual boundaries by being innovative. Chinese modern art is a global phenomenon. China has more than a dozen artists whose works sell for $1 million or more. Chinese architects have progressed beyond imitating foreign designs as in the past. In 2006, Ma Yansong, a graduate of Yale’s architecture school, won an international competition to design a building in Canada. This made him famous in China. Many Chinese, like Ma, are so-called “sea turtles,” scholars who attended foreign universities and are returning to China to seek expanded opportunities. Many join the Western Returned Scholars Association, which is helping to lead China’s transformation.

“[We] don't feel entitled to lecture a leadership that has led millions out of poverty, has the support of the vast majority of the people and is well aware of what needs to be done.”

Classical music is alive and well in China – so much so that Lorin Maazel, music director of the New York Philharmonic, said that China could be “one of the most important defenders of classical music.” Symphony, ballet, opera and avant-garde drama play to sellout crowds in major cities. Cinema flourishes. Even farmers are engaging in the arts, writing, singing, painting, photographing and stepping into “the literary and artistic ranks in growing numbers.”

“Pillar 6: Joining the World”

Despite its critics, China has made substantial steps toward taking its rightful international place. Its infrastructure is world-class. For example, its airlines have gone from being the globe’s most hazardous to its most secure, even better than U.S. and European carriers. China is now a magnet for foreign investment and a foreign investor in its own right. Because it has devolved enough economic power to the provincial level, many provinces are now making foreign investment deals. The U.S. increasingly sees China as a strategic partner, though points of friction, such as the exchange rate, remain irritating. Some experts have suggested a G2 summit of only China and the U.S., but China prefers to engage more widely. Its relations with Japan and Korea are progressing despite remaining obstacles, and it is engaging with Latin America. China is helping Africa build up its infrastructure in return for long-term supplies of resources. The West often questions and criticizes China’s ambitions and actions in Africa, however, “Westerners who claim that China is taking advantage of Africa’s resources might want to think again about who is currently gaining the most from Africa.”

“Pillar 7: Freedom and Fairness”

China’s leaders face a trade-off between social equity and economic progress. The reformers led by Deng Xiaoping acknowledged that some people would get rich before others, but state, “To get rich in a socialist society means prosperity for the entire people.” The government’s goal is to elevate a majority of people to middle-class status by 2020. However, different states of economic progress are unfolding in various areas, and broad disparities still exist between rural and urban standards of living. The government of Wuxi is the first in China to try to raise the “living security standard” of rural areas to meet that of urban areas. Entrepreneurs, such as manufacturing magnate Zhang Yin – China’s richest person and the world’s richest woman – are expanding China’s international business. Half of the 1.6 million households categorized as wealthy in China in 2008 were not rich four years earlier. To institute equity, the leaders of China’s “vertical democracy” are working to provide people with medical care and a “social security system.” China’s most crucial need is improved education, “the key to opening the doors of freedom and fairness,” not to mention wealth.

“Pillar 8: From Olympic Gold Medals to Nobel Prizes”

The 2008 Olympic Games were China’s coming-out party, a display of social and economic advancement, far more than just artistic or athletic prowess. China’s progress in science and innovation soon will reach the same level as these other achievements. In China, innovation has become a national priority, as the Chinese increasingly recognize the importance of intellectual capital. High-technology industries such as aircraft, electric cars and robotics are emerging in China and seem likely to succeed. While China may “not win a Nobel Prize tomorrow,” its achievements “should certainly gain the acknowledgment of the world.”

“China has its own goals and dreams. How to get there, China and its people will decide.”

This view of China is admittedly mostly positive and optimistic. Perhaps that balances the fact that China receives so much negative coverage and criticism, particularly on issues like Tibet and Taiwan. China’s leaders understand the challenges ahead and are making progress. Even in controversial concerns, positive change is underway and there is more than “one truth.” Ultimately, the Chinese will do what works for them; foreign critics should not demand that they do what works for the West.

About the Authors

John Naisbitt has studied China since 1967 and has visited more than 100 times. Since 2007, Doris Naisbitt has directed the Naisbitt China Institute. She is also a professor at Nankai University.

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