Why doesn't TCL suffer from "founder dependency syndrome"?

Ask AI · How can TCL’s institutionalized legacy prevent corporate decline?

Why do some companies flicker briefly and vanish, while others manage to thrive for generations?

In a deep analysis of the TCL case in the annual blockbuster book “The Billion-Yuan Code,” Qin He Dao’s guide to the billion-level evolution program’s chief mentor and the founder of Shenzhen Mingwei Management Consulting, Lianming Bo, said: “My years of management practice have convinced me that the answer is hidden in these five words: ‘entrepreneurial spirit.’”

For a company, entrepreneurial spirit is like a soul to the body. It can continuously inject power into a business, keeping it clear-headed in good times, granting it new life in adversity, and allowing it to stay ahead through ongoing transformation.

TCL’s miraculous transformation from a local small factory into a global tech giant is driven by the entrepreneurial spirit of its founder, Dongsheng Li. Back in the 1980s, when Li Dongsheng resolutely gave up the “iron rice bowl” and took over TTK Household Electrical Appliances (Huizhou) Co., Ltd., which was on the verge of bankruptcy, he embedded the adventurous spirit of “daring to teach the sun and moon to usher in a new sky” into TCL’s corporate gene.

In the years that followed, Li Dongsheng infused TCL with its distinctive spirit through a series of key decisions: mortgaging real estate to introduce the first domestically produced hands-free telephone production line, demonstrating the courage to be first; pushing through the pressure of massive losses to carry out a cross-border acquisition of Thomson’s color TV business, reflecting the ambition for global layout; and investing heavily to establish Huaxing Optoelectronics to break foreign panel monopolies, showing the responsibility of rejuvenating the industry for the country. Behind these decisions lies entrepreneurial spirit—deeply integrating personal ideals with the company’s mission.

But can a company continue to develop relying on entrepreneurial spirit alone? No—entrepreneurial spirit determines a company’s height, but what determines how far that company can go is whether it can convert that height into the organization’s depth, and whether it can transform entrepreneurial spirit into the organization’s institutionalized capabilities.

“ The Billion-Yuan Code” analysis says that over the past forty-plus years, countless entrepreneurs have created business miracles with personal grit and daring; however, as founders step away, most companies quickly slide onto the road to decline. The failures of these companies reflect a harsh reality: companies that rely on personal heroism ultimately are just brief mayflies in the tide of the times.

But TCL has not suffered from this “founder-dependency syndrome.” What makes it different is that its founder, Dongsheng Li, through systematic institutional design, transformed personal spirit into the group will of management—and even into company-wide consensus—achieving an institutionalized legacy.

For example, the international acquisition in 2004 put TCL into an unprecedented predicament, yet it was precisely this crisis that led TCL to establish “executive co-investment”—requiring the management team to put up real money to jointly invest in major projects. This system may seem simple, but at its core it changed the decision-making mechanism: when everyone thinks like an entrepreneur, risk-taking is no longer the founder’s personal action; it becomes the organization’s collective wisdom.

For another example, by building an “eagle series” talent cultivation system—an “Eagle Project” for senior executives, a “Swift Eagle Project” for middle managers, a “Flying Eagle Project” for frontline managers, and a “Young Eagle Project” for newly hired graduates—entrepreneurial spirit is no longer confined to management, but permeates every level and every employee.

Precisely because of such an institutionalized legacy, at TCL, “entrepreneurs” are not a title for one person, but a way for a group of people to survive. At the same time, TCL also has a unique gene distinct from traditional manufacturing firms: it has the edge to be first, the calmness of honing a sword for ten years, and also the aspiration to treat technical breakthroughs as a mission.

( This article is an excerpt; for the complete content, see Zhenghe Dao’s annual new book “The Billion-Yuan Code”)

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