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Here's an informative interview with Michael Yu (CEO of New Oriental), originally from the Wall Street Journal. It paints a picture very different from the image in my last post. In particular I get a sense of the cultural difference between East & West.

This comment stood out in particular. As an investor who is 100% about making money from this company, I still found it one of the more endearing statements (maybe it's not as paradoxical as it feels, if his attitude makes more money in the long run?).

Everybody should understand the mission of New Oriental, the things people have to abide by all the time, like the responsibility we have to Chinese education. People should understand our system: We are making money, but making money is not our purpose.


WSJ: What was your first job and what did you learn from it?

Mr. Yu: My first job was at 7 years old, planting rice seedlings and doing other farm jobs. I learned you have to be persistent. You have to work hard for a long time if you really want to get something.

For my second job, I went to a middle school to teach English. I was only 16. At that time my English was so poor. But one of the teachers got pregnant, so the head of the community heard that I was learning English, and he asked me to go teach. I was teaching students who were 12 or 13, so I became these students' friend. That was the starting point of New Oriental's teaching style.

WSJ: Why is it important for teachers to maintain that good nature in the classroom?

Mr. Yu: You have to play two different roles. You may feel depressed, but when you go into the classroom you have to consider yourself an actor. You know that many students are looking at you as maybe a role model.

WSJ: What books have you found most useful for business?

Mr. Yu: Let's divide it into Chinese books and Western books. Western books are more technical. Chinese books are more philosophical. The three that influence me most: One is the Dao De Jing [also called the Tao Te Ching, traditionally ascribed to Laozi, the ancient Taoist sage]. It's only 5,000 words, but it gives you real wisdom about how to deal with people, with the government, and with the system. Another is from Confucius, The Analects. It's not so philosophical, but gives you advice about how to deal with the everyday world. The other book is by a follower of Laozi named Zhuangzi . That book gives you great ideas on how to enjoy your life: how to give up some things, and which things you really need to stick to and believe in.

On the Western side, the books that influence me most are management books. "Good to Great" by Jim Collins ["Good to Great: Why Some Companies Make the Leap...and Others Don't"] -- even though some of the companies he discusses actually have collapsed, the theory is still useful. And a book by John C. Maxwell, "The 21 Irrefutable Laws of Leadership." The other book is written by Jack Welch , called "Winning." It helped me see that there are some business principles that are the same in China and the West.

WSJ: What are you reading now?

Mr. Yu: "Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time" by the founder of Starbucks, Howard Schultz. But also I'm reading literary books, mainly in Chinese.

WSJ: Is there something you wish that every new employee starting at your company already knew?

Mr. Yu: Everybody should understand the mission of New Oriental, the things people have to abide by all the time, like the responsibility we have to Chinese education. People should understand our system: We are making money, but making money is not our purpose.

WSJ: In your industry, what is the biggest difference between China and the West?

Mr. Yu: The complexity in the Chinese training industry is that the government doesn't have very detailed and clear regulations about the business. Sometimes you have to figure out what is legal and what isn't. Like when New Oriental was going to [make its initial public offering], we figured it out, by consulting government officials, and by our understanding of China.

The other is people's attitudes about education. The view of education by China's people isn't about becoming creative or innovative, or to find more wonder in their life. It's all about social status.

WSJ: Have you ever made a decision that you felt let people down?

Mr. Yu: Sometimes you have to get rid of some people, when you perceive that they don't have the same mission and vision, or they have become too greedy. Even though maybe sometimes it's your fault, because at the very beginning you gave people too much money and they became greedier, you cannot take it and you have to fight back, and people leave.

WSJ: How do you deal with that?

Mr. Yu: You have to use a systematic approach to human-resources performance evaluation, not decide by yourself who's going to get more, and who's going to get less. Because all these people come back to you as your friend, to bargain, and it becomes very difficult.

WSJ: What's the most satisfying decision you've made in this business?

Mr. Yu: Maybe the IPO decision. Because if we did not IPO, I still could run New Oriental but maybe some of my talented people would have left.

WSJ: At same time, that created new pressures and expectations, right?

Mr. Yu: Yes. Some of my employees got shares and options. So these people are happy. But there are other employees who don't have any options. You have to tell people that if you want to get options, you have to work you can get those benefits in the future.
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