Global Business: 90% of considerations fail? It's funny, most people are full of thinking about how to succeed, why do you spend so much time thinking about failure?
Li Ka-shing: You must think about failure first, once upon a time we Chinese had a saying about doing business: "Before you buy, you want to sell", you haven't bought yet, you should first think about how to sell, you should first think about what will happen if you fail. Because the difference between 100% or 50% of the successful effect is not too important at all, but if a small vulnerability is not patched early, it may bring great damage to the enterprise, so when a project loses money, even if the amount involved is not large, I will discuss with the relevant departments to solve the problem, and the time and spirit spent in multiples are far beyond the proportion.
I often say that when a mechanical watch has a slight problem with one of the gears, your watch will stop. The same is true for a company, where an institution can fail if it has only one weakness. Knowing the details can often prevent crises before they happen.
Global Business: What are the details that you will be watching closely?
Li Ka-shing: Cash flow and the percentage of the company's debt are the links that I always pay the most attention to, and they are important health indicators for any company. As with any growing business, it is important to have a positive cash flow performance.
Global Business: 90% of failures can be said to be the ability to take risks in all directions? Why is this more important than thinking about the key to success?
Li Ka-shing: It can be said that the "commander-in-chief" of the military must consider a way out. For example, the commander of a small country has 20,000 elite soldiers, and when he plans to capture other cities, he must prepare twice as many elite soldiers, that is, 60,000, because after the war is activated, there may be many unexpected changes; Once defeated and retreated, the country has more than twice as many troops to defend against foreign enemies as it normally would.
In any business, you have to consider your own ability to balance the risks, and it is impossible to have smooth sailing, and I have encountered many political and economic ups and downs in my business in the past. I often remember that there is no such thing as a victorious general, so when the times are calm, plan for the future and carefully study possible surprises and solutions.
Global Business: You put a lot of emphasis on risk, but what outsiders have noticed is that in the past 50 years, Cheung Kong Group has repeatedly entered the market in crises, including seizing the opportunity to leapfrog from plastics to real estate in the late 1960s, investing in Shanghai and Shenzhen port business after 89 years, and even investing in Indonesian ports during the Indonesian Chinese Exclusion Movement.
Li Ka-shing: This is actually the opportunity to grasp the ups and downs of the market cycle, and also take into account various factors related to the international economy, politics and people's livelihood, such as the prosperity of real estate, when the supply and demand cycle has reached its peak, it is almost inevitable that it may **; In addition, because of the shift of industrial base, the need to think about the investment to be increased, the decision of what technology is in greatest demand, etc., depending on the project, to find the fastest way to achieve the business goal, it is necessary to go through careful research and investigation in advance.
To be able to vigorously develop in a downturn is to see the latent crisis when the market is booming, and how to deal with it when it comes, which requires a number of conditions.
Global Business: What do you mean by having what it takes?
Li Ka-shing: The key is to be prepared, do what you can, and balance the risks. I often say that "prudence" is also an art, and it is the ability to make quick decisions at the right time, but this is not an excuse for indecision or stagnation.
To run a larger business, you must be aware that many livelihood conditions are closely related to your business, so it is very important to operate prudently, for example, when there is an acquisition, all the cash required must be prepared in advance.
I'm more careful, I've been through poverty, how can I take risks? You see a lot of people who are proud of the spring breeze and suddenly become poor, I will never do this, it is all step by step.
There is a sentence that I firmly remember: "The poor are easy to live, the poor business is sad", no matter how poor you are, you can't eat good white rice, you can buy the cheapest rice, or you can live, people eat meat, you can eat vegetables, the cheapest vegetables; But poor business is hard, very difficult. So be careful, so to speak, walking on thin ice.
Global Business: You just mentioned that the key to vigorous development in times of recession is to "make adequate preparations, do what you can, and balance risks". When the opportunity arises, we are able to make a quick decision at the right time. In 1977, your lightning acquisition of the Hilton Hotel in Hong Kong was a classic...(Editor's note: Changshi to 2.)The HK$300 million acquisition of Yonggao Company, which belongs to Hilton Hotels, took less than a week. This is the first major acquisition of Cheung Kong listed on the stock exchange).
Li Ka-shing: The most important thing is to absorb the latest and most accurate technology, knowledge and all the market dynamics and information related to the industry in advance, so as to have a well-thought-out plan so that you can easily be in a favorable position in the competitive market. You have the news, and when the opportunity comes, you can act immediately.
I was able to buy the Hilton because one day I went to a cocktail party, and there were two foreigners talking in the back, one said that there was a hotel for sale in the Central District, and the other party asked him where the seller was**? They knew that too many people knew about the drinking party, so he said, "In Texas, I knew immediately that they were talking about the Hilton Hotel." Before the party was over, I had already gone to the seller's accounting firm (the seller's representative) and asked his auditor to say that I wanted to buy this hotel.
He said strange, we only decided to sell it two hours ago, how do you know? Of course, I laughed and didn't answer myself, I just said: If you have this thing, I'm going to buy it.
At that time, I estimated that hotel rents in Hong Kong would skyrocket in two to three years. (The seller) is a listed company that owns Hilton in Hong Kong and Hyatt Hotel in Bali, but I only count its assets as Hong Kong Hilton, which is already worth buying with it. That's the decisive information that keeps this company in my hands.
Global Business: Isn't there a competitor to this business?
Li Ka-shing: First, because no one knows, and second, I shot very fast. Others weren't so fast. Because I heard it at the cocktail party, I immediately called ** to give me a director, he is in the audit line, I asked, he and the seller's audit is a good friend, immediately to his office to talk.
The place where you are sitting today (pointing to the ground) is part of the address of the Hilton. After I bought that transaction, the company's assets doubled in value in a year.
The most important thing is to pursue the latest information, and it is the same in every line of work.
Global Business: Pursue the latest information in your career, but what about personal finance?
Li Ka-shing: Over the years, from 1950 to today, there has never been a year less than last year in terms of individuals (assets). To do this, the first rule is not to be in debt. I haven't had a single debt since 1956, my debt is this (there are two big and small polar bear statues on the side table, pointing to the little polar bear), and my cash is so big (pointing to the big polar bear), this is what I use today (laughs)!
Global Business: The first principle of personal finance is not to be in debt, but what about investment?
Li Ka-shing: When I invested, I first imagined how far the investment could fail? It doesn't matter how many times more I succeed, I have also invested more than ten times to make more than ten times, and some businesses are also doing very well, and the loss is very small, because I am not greedy. The company has never lost money, and personal profits and property have been increasing. But I don't have a chance to make a quick buck because I'm more careful (Warren Buffett said: I know how to make money fast, I just see that I will have a fixed profit in the future).
Global Business: Is there a time when personal investment is most challenging?
Li Ka-shing: No, because I don't invest in just one industry, I'm diversified, so there are returns anyway, I'm more careful. And I personally (assets), many of them can get cash in a week.
Global Business: What percentage of your investment is the percentage of your investment that you can get cash in a week?
Li Ka-shing: Not less than one-third. For example, you can get bonds and bonds in a week. Of course, I have other investments, such as real estate, which are not immediately convertible into cash.
Global Business: Mr. Li, you said that there is no formula for success, but if you had to say the three principles of success, what would it be?
Li Ka-shing: First, if you do that industry, you must pursue the best knowledge, information, and technology in that industry, and you must be in the best state. That's number one. Second, hard work and perseverance. However, it is very important that if an organization does not have knowledge related to this industry, if you make a mistake, no matter how hard you work and have perseverance, the cost of your failure is too great. The third is to establish a good system and talents.
Global Business: You just mentioned that you must have the most up-to-date information, and in addition to that, you need to have a system, but you manage a wide range of businesses from retail and port transportation to the oil industry, how do you manage them with systems?
Li Ka-shing: This is an era of diversity, and there are many challenges in all directions. With a presence in 55 countries, we have to structure and culture to take into account the expectations and concerns of our colleagues from different locations.
Therefore, the flexible structure can deliver life power to the group, and can also give the management of different businesses the vitality of self-development, and even let them compete with each other to constantly find the best development opportunities to bring the greatest benefit to the company. Companies must have a sound governance code and clear guidelines in place to ensure creative space. For example, Cheung Kong has had a lot of different creative organizations and managers in the past ten years, and they have performed very well, and all projects, big or small, have great potential and good profits.
It is important to know that the larger the enterprise, the more feasible it is to have a single directive and action, because it will limit the different management levels to use their expertise and experience.
I'll give you an example. In 1999, two months before I decided to sell Orange, the management advised me not to sell it, or even to buy another company. I gave them four conditions: if they can do it, do it their way.
1. The target must have sufficient liquid cash; 2. After the completion of the acquisition, the debt ratio cannot be increased; 3. After Orange issues new shares for acquisition, Hutchison still has to maintain 35% of the equity, and I told them that 35% of the equity not only protects the interests of Hutchison, but more importantly, protects the interests of all shareholders of Orange; 4. Have absolute control over the acquired company.
They were very happy to hear this, and they also agreed with these four principles, thinking that if they stayed within these four points, they could go for the acquisition. As a result, they could not do it, and of course the proposal could not be implemented.
I set up four coordinates for the orange management to let them know clearly that this is the principle of the company, and then when he goes there, he will use these four principles. But I can't go beyond my four coordinates (four coordinates in the air).
This is just one of many examples, in fact, in Cheung Kong and Hutchison Group, we have many subsidiaries, and I will set different coordinates for each company according to its business, business environment, financial situation, market prospects, etc., so that the management can play flexibly within the coordinate range.
Global Business: You mentioned that the third principle of running a successful business is talent, and Wilsch said that he spends 60 to 70 percent of his time on talent, how do you define what is the criterion of good talent?
Li Ka-shing: Successful managers should be Bo Lè, constantly selecting and recruiting people who are smarter than him, but some people must avoid it. It is absolutely impossible to choose a "corporate star" who is famous but flaunts himself. Businesses can't afford to be overwhelmed, submissive or discouraged, and they can't tolerate corporate stars who take self-performance as the starting point.
My experience is that loyalty is the basic when selecting a team, but it is more important to remember that people with loyalty but low ability or low moral level will sooner or later exhaust the team and drag down the company, and they are the most unreliable people.
Therefore, it is necessary to build a team that works together. The first rule is to be able to hear the silence, and you have to ask yourself if the team is having fun with you, whether you can be open-minded, fair, magnanimous, and recognize the dignity and creative capacity of each person, but I remind you to have principles and coordinates, not to ask you to be a time-consuming and overcorrected person.
It may be that the background of my adversity in my youth can make it easier for me to judge the strengths and weaknesses of a talent in a short period of time, guide him from the side, and give full play to his strengths.
Global Business: After being a boss for more than 50 years, you have a deep understanding of management and leadership, and you have also given a speech on the "art of management", can you analyze the difference between bosses and leaders?
Li Ka-shing: I don't dare to compare with those management masters, I don't have the opportunity to go to school, I have worked hard to self-study all my life, and strive for new knowledge and learning, is there any art to management? I have my own experience and experience.
I often ask myself, would you like to be the boss of a team or the leader of a team? Generally speaking, being a boss is much simpler, and your power mainly comes from your status, which may be due to divine fate or with your hard work and professional knowledge. Being a leader is more complicated, and your strength comes from the charisma and charisma of human nature. To be a successful manager, attitude is as important as ability. The leader leads the crowd and urges others to be willing to work hard; The boss only knows how to dominate everyone and make others feel small.
Global Business: In today's dialogue, you talked about a lot of ways of doing business, do you echo what you said in your speech at Shantou University this year (2007), "make things by plan, manage things in stages, do not rush quickly, and govern by doing nothing", you said that if you can "bring out the essence of these four sentences, life can be so good". In particular, the phrase "not fast" is particularly interesting?
Li Ka-shing: For me, the most beautiful battle is actually a battle that clearly calculates the gains and losses in advance. The above four sentences are interlocking and mutually causal.
"Good planning" is to think carefully about everything, plan and then act. "Segmented management" is to understand the order of things and proceed step by step. "Don't hurry", you have a lot of information for a long time, and you already know a lot of difficulties, that is, before you did this, you always thought about if you encountered this problem. What do you do? Because you have been well prepared, you can be confident, and when the opportunity comes, you can quickly grasp it and hit it with one blow. If you don't have an idea, how about "not rushing"?
"Governance by inaction" requires a good system and a good governance system to manage. We now have about 250,000 employees in 55 countries, and most of our employees are in Western countries, and if you don't have a good system, you don't have enough time to manage.
With the above four factors (good planning, segmented management, speed without hurry, and governance by inaction), the blueprint for success will naturally appear.
Global Business: So you can do it "without hurry", in fact, you have risk management, information collection, and financial preparation, and when you encounter opportunities, you can "hit the ground with one hit". How do you pass on this recipe for success to your descendants?
Li Ka-shing: I told my grandchildren that if you can be a "benevolent lion", you will succeed! Kindness is nature, you are usually kind, but only kindness, business can not be successful, in addition to being legal, you must make money reasonably. But if people are not good, the lion has the ability to resist, and I think this should be the case for myself. Very kind, a very good person, but if someone bullies you, you can't cower, you have to be able to resist.