Tag: Kai-Fu Lee

The efficiency trap

Efficiency is often confused with effectiveness. It can be a trap.

“Efficiency is doing things right; effectiveness is doing the right things.”

Peter Drucker

You can be efficient in doing the wrong things. You can be efficient in doing things you shouldn’t even do. You can efficiently waste your time.

Too often, I make the same mistake. I’m optimizing prematurely. And not asking the important questions.

Efficiency asks us: How can we make this faster, cheaper, with less waste?

Effectiveness asks us: What is the job to be done? What is truly important? What can we eliminate, automate or delegate?

I re-learned this lesson in AI Superpowers by Kai-Fu Lee. China is often not very efficient, because they move super-fast and over-invest. Yet they are hugely effective, because they get the job done, and fast. Be it high-speed rail, mobile payments, or AI, China is brute-forcing its way to success.

You find the same in nature. A tree that produces thousands of seeds isn‘t very efficient. But it’s effective in growing its population.

Efficiency comes from scarcity. Effectiveness sees abundance. Better to waste some money or resources, than to waste time.

Now I understand why Stephen Covey named his bestseller 7 Habits of Highly Effective People and not 7 Habits of Highly Efficient People. (It’s a great book that I can highly recommend.)

To summarize:

Effectiveness first. Efficiency second.


AI in China

Here are some examples of how Chinese companies are applying machine learning:

Chinese company Yongqianbao is using artificial intelligence to screen data to determine creditworthiness when issuing loans. No credit agents necessary! Watch this CNBC clip about them

ByteDance (a private company, last valued at $78B) uses machine learning to source and push content to users. Their main product is Toutiao. 90% of their users are under 30 years old and on average spend 76 minutes on the site every day, resulting in 1.3 billion articles read every day. Another of their products is TikTok. It gained popularity and became the most downloaded app in the U.S. in October 2018. TikTok employs artificial intelligence to analyze users interests and preferences through their interactions with the content, and display a personalized content feed to each user. I tried it and had to delete it, because it was too addictive.

iFlyTek is specialized on voice recognition and speech synthesis. Watch how they made Trump and Obama speak Mandarin, entirely generated by their algorithms.

(I learned this from AI Superpowers by Kai-Fu Lee.)


Give up your storefronts?

An increasing number of hairdressers and manicurists are giving up their studios in China. They get booked via app and do home visits instead.

This is called Online-to-Offline (O2O), and it’s booming in China. (Link / Link).

Tired of bathing your dog? Hire a dog bather that comes to your home. Too busy to pick up your kids from school? Hire a private driver that brings your child home, and keeps you posted via app.

Are you ready to join this new economy? Or are you holding on to what’s familiar and comfortable?

No matter what you do, at least upgrade your service: give your clients an option to book online, or start communicating via text message or email.

My Crossfit gym has nailed it: all classes are booked via app, and the main communication channel is WhatsApp. Easy and effective!

I asked a bicycle workshop if they can send me a text message when the work is done, as other shops do. “We don’t do that here”, they said. I suggested that they think about adding it. “No”, they insisted. So I don’t come again, I thought. Simple.

Of course, you don’t need to build these services yourself. There are platforms and Software-as-a-Service solutions for everything.

Do the work and upgrade your business, before it’s too late.

(I learned this lesson from AI Superpowers by Kai-Fu Lee.)


China vs. Silicon Valley

Silicon Valley is mission-driven, pure, about making a dent in the universe. Abundance mindset. Copying is shameful.

China is market-driven, hyper-competitive, survival of the fittest. Scarcity mindset. Culture of copying.

In Beijing entrepreneurs often joke that Facebook is the most Chinese company in Silicon Valley, for its willingness to copy and its fierce competitiveness. 

While you might be somewhat repelled by the aggressive, gladiator-style entrepreneurship in China, the results compared to the USA speak for themselves:

  • Rides on shared bikes 300:1
  • Mobile payments 50:1
  • Food delivery 10:1
  • E-commerce purchases 2:1

Let’s also not forget that Uber lost against Didi, eBay lost against Taobao, and Meituan is more successful than its role model Groupon ever was.

According to Marc Andreessen, the winning companies 20 years from now will be enormously large, maybe 10 or 100 times the size of today’s Google or Facebook. I’m pretty sure that a lot of them, if not the majority, will come from China.

It’s foolish for us Westerners not to watch China more closely. I know that Charlie Munger does. And that’s what I’ll be doing as well.

(I learned this lesson from AI Superpowers by Kai-Fu Lee.)