Chen Chunhua on Uncertainty

Source and verification limitations (2026-11-02): This is an excerpt from a talk by Chen Chunhua on uncertainty. Kodak's 2012 filing was for Chapter 11 reorganization of the relevant US entities; it did not mean that all of its worldwide operations disappeared. Fujifilm's diversification took place in several stages and cannot be reduced to a single year. Primary material has not been obtained for the market-value figures or the quotation attributed to Tagore. The analogy with energy in physics does not establish a causal relationship in psychology or interpersonal relationships. Sources and reference links (see the explanation above for the scope of verification): https://mp.weixin.qq.com/s/RBZbtjkUYeWgwWf3aZvCgw ---- Outstanding companies are able to overcome crises because they have three particularly important characteristics: First, they need sufficient growth to respond to change. Companies must keep moving beyond these changes and demand sufficient growth of themselves. The same applies to individuals. If you cannot grow your knowledge and capabilities, you will also struggle to respond to the unknown. Second, they grow through continuous transformation and change. During the pandemic, for example, if you remained accustomed only to running a physical store, you could not grow when physical distance became a barrier. Some stores that moved quickly from offline to online achieved even more growth than they had previously achieved in their physical locations. I think this growth comes down to whether you pursue growth through continuous transformation and change. Third, they follow the principles of the market and the objective patterns of development. What are the principles governing today's market? At the macro level, we can see one basic pattern: the world economy has entered a “new normal.” At the micro level, market patterns are also changing. You cannot understand the current environment and market through past experience alone. You must follow the principles of the market and the objective patterns of development, going beyond experience. These three characteristics are what outstanding companies have in common. Following this logic, I believe it is particularly important for the managers of these companies to be able to manage uncertainty. --- In the past, we emphasized that managers needed organizational, communication, interpersonal, conceptual, strategic, and business management skills, among others. Today, however, an ability we did not emphasize so much before has become very important: the ability to manage uncertainty. How do we develop the ability to manage uncertainty? First, identify uncertainty. Many people have defined this distinction. Ram Charan, for instance, has said that there are actually two kinds of uncertainty: operational uncertainty and structural uncertainty. Operational uncertainty is relatively easy for managers running a business to understand. Changes in market conditions, supply chains, costs, and customers all affect the overall landscape to some degree, but do not fundamentally alter the existing landscape. In a sense, operational uncertainty also remains within a range we can understand. Structural uncertainty changes the industry landscape and has a fundamental impact. When online technologies emerged, for example, many traditional retailers paid little attention. Drawing on experience, we assumed that people would always shop offline, so we did not pay much attention to structural uncertainty. Companies such as Alibaba and Amazon, however, recognized this aspect. Their understanding of retail differed from that of traditional department stores. We cannot say that the department stores had not been doing a good enough job. Rather, structural uncertainty had emerged in the industry. This is why so much industry disruption does not come from within. When we are familiar with an industry, we are less sensitive to structural uncertainty within it. Under the impact of the pandemic, how do we understand growth when the external environment is not growing? We need to pay attention to fundamental changes in the industry. Doing so means recognizing that the changes brought about by the pandemic will create structural uncertainty in many industries. Only if you can identify structural uncertainty do you truly have the ability to manage uncertainty. That is why we see cases that strike us as particularly shocking, such as Kodak. In fact, Kodak was at the forefront of its industry in understanding digital technology. People within the company had already proposed vigorously developing digital cameras and promoting these products in the market. But because the advantages of its traditional business were so clear, Kodak even believed that digital technology should be used to expand the film business. It did not truly understand that digital technology was bringing about entirely new consumer behavior, along with changes in customer value. Kodak held on to its original business model, but consumers had already changed. In January 2012, the US company Kodak formally filed for bankruptcy protection. That month, Kodak's market value fell from a peak of US$30 billion to around US$100 million. Fujifilm, in the same field, understood the industry changes brought about by digitalization and undertook a strategic transformation in 2003. It cut spending on its film business, stepped up digital-camera R&D and marketing, and focused traditional film on medical applications. Thus, 10 years later, when Kodak filed for bankruptcy protection, Fujifilm's market value exceeded US$10 billion. The positions of the two companies had completely changed during the digital transition. Today, we may feel many changes and uncertainties around us. You need to be able to identify them: which are operational uncertainties, and which are structural uncertainties? Once you can identify structural uncertainty, invest in responding to it, move beyond your existing limits, and transform yourself, new opportunities will emerge. Second, coexist with uncertainty. After developing the ability to identify uncertainty, managers also need to learn how to coexist with it. Adjust your thinking rapidly. I hope you can coexist with uncertainty without becoming anxious, uneasy, or evasive. You simply have to learn to live with it, because it is real. How do we coexist with uncertainty? 1. Change yourself first. We are all very accustomed to wanting stability and a sense of security, because without a certain degree of stability, we cannot actually deliver results. Many managers therefore resist disrupting the existing order or changing themselves. But the uncertainty we now face is a completely unstable state. The external environment is uncertain and unstable. Stability and security may no longer be available to you, so you must begin by changing yourself. 2. A dual-business model. A dual-business model means doing everything possible to keep the existing business running while also positioning and developing a new business—creating something new. Why do many companies struggle with transformation and uncertainty? Because they have only one business logic. Take today's teachers: if we insist on teaching only in person, we will certainly be unable to fulfill our teaching responsibilities during the pandemic crisis, because in-person classes are no longer possible. 3. Break the equilibrium. Every problem that arises may also be an opportunity, so do not be afraid of problems: opportunities lie within them. Much of what we need to do, therefore, is train ourselves to adjust. 4. Customer experience. The people who can truly help you in business are your customers. You need to return to them and understand the difficulties they face. Today's managers must retain an intuitive feel for customer needs and use customer experience as a standard of evaluation. I therefore strongly agree with this view: if we see that these uncertainties and crises have caused difficulties for many people, and we are willing to experience those difficulties from the customer's side and then find solutions for them, we have found an opportunity. Yet we do find that many managers lack an intuitive feel for, and sensitivity to, customers. The higher their position, the further they are from customers. The larger the company becomes, the further it is from customers. To sum up, coexisting with uncertainty is not as hard as we might imagine. If you are willing to change yourself, maintain two models and logics for developing your business, break the equilibrium, see change and problems as opportunities, and understand and remain sensitive to customers' difficulties, I believe you will have opportunities and be able to coexist with uncertainty. Third, remain steady. We have one requirement of managers facing an uncertain environment: the greater the uncertainty, the steadier you must be. Where does that steadiness come from? I have found that managers who remain steady usually have four mindsets. I require these four mindsets of myself, and I hope you will cultivate them too. 1. A positive mindset. “Look for the good in everything, act for the best, and good results will follow.” This is a very positive mindset. Ever since I learned this saying, whenever I have encountered a challenge or problem, I have closed my eyes and told myself: look for the good in everything, act for the best, and good results will follow. And in fact, good results really have followed. When a company undertakes a comprehensive transformation of its strategy and organization, it affects everyone, and people struggle to understand. If you explain it to them through this saying, they gradually come to understand. We therefore need you to have a positive mindset and approach whatever you do simply, without overthinking it. Even today, in the face of the enormous impact of the pandemic, if you can continue calmly doing what you are doing, results will follow. Successful managers share a capacity to tolerate ambiguity and risk. If you cannot accept ambiguity or bear risk, it is very difficult to remain steady. 2. A reset mindset. Faced with new challenges and problems, we need to set aside our previous experience, because past experience alone cannot take us into the future. I encourage everyone to keep learning and continually reconstruct their knowledge system, because learning is a particularly good process for resetting. In working on corporate culture, I have felt something deeply: accepting new things is not difficult. The real difficulty is clearing out old ideas. People who keep growing and facing change and challenges are people who can adopt a reset mindset. 3. An open mindset. An open mindset means being willing to open yourself up, embrace change, accept challenges, and learn what you do not yet know. In the language of physics, energy is gained through continually opening up and exchanging with the outside world. If you cannot exchange energy with the outside world, your own life will also wither. 4. A mindset of conviction. Have the strength to believe: believe in your dreams and goals, your partners, your superiors, your family, and, finally, yourself. Today, in the face of technological and digital challenges, knowledge is very important. Believe in the power of knowledge. Tagore offered this description of love: “Because we believe, we see.” #ExcerptFromATalkByChenChunhua ---- Original: https://mp.weixin.qq.com/s/RBZbtjkUYeWgwWf3aZvCgw