Exclusive interview: Tencent's SY Lau

For the first time in Cannes Lions’ 62-year history, a Chinese executive will be awarded the Media Person of the Year accolade at the global festival of creativity. As SY Lau, senior EVP of Tencent, the Chinese internet giant that rivals Silicon Valley’s titans, and president of its Online Media Group, goes on stage to collect the coveted Lion trophy, he will join a roll call of some of the world’s most inspiring minds in media, including Facebook founder Mark Zuckerberg, HBO CEO Richard Plepler and Google executive chairman Eric Schmidt, all former recipients of the award. 

Lau, a third-generation Chinese born in Malaysia, joined Tencent a decade ago, leaving the CEO seat at an ad agency having become disillusioned with mainland China’s advertising industry. Over that time, he has seen mobile adoption transform Tencent’s business. Today, Tencent not only owns China’s most-used internet portal, but is amongst the biggest publicly traded internet company in the world on a revenue basis, behind only Amazon, Google, eBay and Facebook, and has even has a banking licence. The company’s ascendancy since it first listed on the Hong Kong Stock Exchange in 2004 has also been driven by a diverse mix of products and services, from games portal QQ Games, a search engine, microblogging service Tencent Weibo to the TenPay online payment system. Its most well known property outside of China is WeChat, now the most-used mobile app in China.

Lau has come a long way from his humble beginnings in Kuala Lumpur, where his father worked in the editorial department of a daily and his mother was a tailor turned homemaker. He began his career at McCann Erickson before moving to China in the early 90s. Among other titles to his name, he is the honourary ambassador to the City of Brisbane. He is also, as of today, a member of Campaign Asia-Pacific's Digital A-List.

Atifa Silk: Ten years ago, you left China’s ad industry for Tencent. Why?

SY Lau: The decision was driven both by pull and push factors. I worked in the agency business in China during what I would call the ‘last century’, and found it rather frustrating. At the time, the 4As industry (multinational agencies) was undergoing an era of soul searching. There were many incompetent leaders that were not leading the industry in the right direction. Compounded by the fact that there was a rise in the local Chinese agencies that came into the market place offering services that were seen as more endearing to local clients at a fraction of the cost. MNC agencies were losing both business and talent. It was not a trend that any individual could reverse and I wanted to get out. 

In 2006, the internet had not really taken off in China. User numbers had just gone past 100 million, which was approximately 10 per cent of the total population. The scale and influence of Tencent was nothing compared to what it is today. Our peak number of concurrent users online was just 16 million, a trifling number in a country of 1.3 billion. But I was able to see that the internet would be a powerful driver of innovation. I just never imagined it would change people’s lives as dramatically as it has, touching every part of society. And coming from the world of advertising, I knew how to manage content, which is the ultimate output of consumer insights.

Atifa Silk: What were your first impressions of Tencent?

SY Lau: I thought, ‘my goodness, they don’t speak English at all’. I remember when Pony Ma, the chairman, hired me I was impressed by Tencent’s eagerness. Personally, I didn’t have anything to lose; I was 40 years old and could take a ‘leap of faith’. I remember in the first three months writing emails in English and realising no one replied. So I quickly polished up my Chinese. I came in thinking that I have been the CEO of a multinational agency and my job was to lead and teach. It was very superficial and I thought the brand identity, the conference room layout, the way people dressed — everything was wrong, nothing was right. Looking back, I am lucky that it was a forgiving environment and the founders cherished the idea of diversity and were patient with me. 

Atifa Silk: Tencent has proven to be a leader in innovation in China. What does innovation mean to you? 

SY Lau: An innovative idea may originate with an individual, but the realisation of the idea requires the highly functional organisational structure of an entire company. Too often we talk about people like Steve Jobs when the topic of innovation comes up. But if a company of nearly 30,000 highly talented people had to rely on the ideas of only one or two individuals, it would be catastrophic. We have never lacked ideas, but what we need is a way to recognise them and a mechanism to make them reality. That’s the tricky part because innovation means change — change to an existing product concept, the structure of the talent base or the entire business model. And, implementing innovative ideas means accepting trial and error, a potential waste of resources and, often, complete failure. If an organisation isn’t strong enough, the results can be disastrous. 

Atifa Silk: What lessons have you learnt?

SY Lau: How well we design the organisational structure of a company to quickly respond to changes, to effectively carry out new plans, and be highly resilient when faced with unexpected failure, determines how successfully we can innovate. This structure is ‘the organisational enabler of innovation’. Innovation is not necessarily revolutionary. It can be a gradual and peaceful process. We tend to think that innovation means the birth of something new, and the death of something old. But one lesson that Tencent has learnt is that not all innovation is ‘revolutionary’ or disruptive. It depends on how big a step we take with a single innovation. 

Atifa Silk: What is the pace of innovation at Tencent?

SY Lau: The ‘pace of innovation’ in Tencent is not hasty. The founder of Tencent, Pony Ma, says we are “running quickly but by small steps”. In other words, we don’t pursue single-step innovations, since big innovations require the accumulation of technological knowledge over time. In a fast developing market like China, time is vital to businesses. A single stumble caused by an innovation rushed to market could put the company at risk of total failure. Therefore, we adopt a course of frequent and flexible micro innovation as a way to enhance our creativity and flexibility. We are living in an era where the internet and technology have expedited change. We can’t sit still; we need to make innovation a regular and constant component of our business.

Atifa Silk: What are the best ideas that succeed in China?

SY Lau: Ideas made up of 10 per cent inspiration and 90 per cent perspiration. All of my successful ideas see the change brought about by technology become an indispensable component of people’s lives. Let me ask you: why would you stream TV shows online, if the number of ads are the same and you can watch it on-demand? I’ve asked myself this since the day we launched our video platform. I now have the answer. 

Last year, we bought the online broadcast rights to one of China’s most popular TV shows, ‘The Voice of China’, which is in its third season and you would assume people may not be anticipating it as much now. But, in fact, we scored 4.2 billion video views during season three, which is 2.3 times more than the previous season. 

I believe key to that success was the new experience brought to the show by ‘shake-it’, an interactive function built into WeChat Instant Messenger App, which allows the audience to ‘shake’ their phone to guess which contestant will be selected. It’s a simple and playful function that means viewers aren’t just watching the show anymore; they are experiencing it and interacting with it. 

Atifa Silk: What is your business philosophy? 

SY Lau: China is an extremely complicated market. Development levels vary greatly. Enterprises in different geographical regions and industries have different guiding principles, integrity, ambition, customer loyalty and so on. 

There is no universal principle that applies to all. My belief is that bringing value to the consumer is the first priority. This is also Tencent’s business philosophy. No matter how quickly technology evolves, or how complicated the competitive landscape is, increasing consumers’ value is what guarantees sustainable growth. We have achieved this through our ‘404 Page Not Found for Missing Children’ and other initiatives. 

In this capricious market, I have witnessed too many decisions made primarily for short-term returns at the cost of failing the users. But if we want to build Tencent into a ‘century enterprise’, making consumer value our first priority is the only way to accomplish this task.

Tune in tomorrow for Part 2 of this exclusive interview.