Corporate Change and Traditional Chinese Medicine

Abstract

This paper attempts to examine the role of business functions in the corporate change in light of the traditional Chinese medicine and provide a unique view that the corporate change hinges on the timely termination of the old business model. The five elements theory has been successfully applied to the principles of traditional Chinese medicine (TCM). If organizations are considered as human bodies, what could be learned from their organic reactions to the change in the environment from the perspective of TCM? There are three organs－the liver, spleen, and lung－bearing a close relationship to the body’s reaction to the external change. The functions of the liver, spleen and lung could be understood as those of the research and development (R&D), operations, and accounting/financial functions respectively. The Nei-Jing says, “The liver is the foundation of terminating extremes.” The extremes characterize the critical points of the occurrence of the fundamental changes in the human body. As extremes and disharmonies occur during the interplay of the natural elements, plagues and disease arise to cause suffering in people. The dramatic change in the weather always necessitates a fundamental change in the human body. What is the organ that can monitor and control the critical points in time to prevent the effects of imbalance from the macrocosm upon human beings? It is the liver that is responsible for detecting and making adjustment to dramatic environmental changes. Likewise, the R&D function is expected to assume the role of a terminator of the extremes and a matchmaker between the innovation and marketing function when a firm is confronted with serious threats. The terminator focuses on how to stop in time the obsolete business plans and actions while the matchmaker is responsible for reconstructing market boundaries through differentiations in marketing related areas or activities. Nevertheless, the R&D function cannot perform these two tasks well without its cooperation with the other two functions related to the corporate change: operations and accounting/financial functions. The operations function should be responsible for screening out useful the practice or knowledge for the next innovation. On the other hand, the accounting/financial function could contribute to the evaluation of the cost and benefit of the plans and execution concerning the planned change.