Great article Howard. Inspiring but, as others have said, puts the focus on the disciplined and relentless pursuit of solving problems. A couple of years ago i bought my third Hyundai Tucson (sequential, not at the same time). It’s a nice vehicle, but i had really wanted a plug in hybrid, which they don’t make. About 2 months later i came across a BYD display and saw a virtually identical vehicle, plug in hybrid, really nicely fitted out. I can see that in 2-3 years my next car will likely be a BYD, and probably fully electric as they conquer the energy density and range issues. If only all companies could be as devoted to improvement in the way that they are.
Thank you! That's exactly the kind of moment that should keep Hyundai's leadership up at night. You were already a loyal repeat customer, three Tucsons deep, and they simply didn't have what you wanted…
The product was right there on the floor. That gap between what incumbents offer and what customers are ready for is where disruption happens. Appreciate you sharing the story!
Fantastic article! I’ve waited for this story. Thanks so much. When can I buy my BYD car? It is so interesting that the personality of the owner comes through as quality in the product itself. I know a story of an American company that did that in 1950. Tektronix. Thanks.
Randall, thank you. The Tektronix comparison is spot on. It was the same obsession with the instrument itself, not the marketing of it. When the founder's identity is inseparable from the product's integrity, you get a very different kind of company.
Wang Chuanfu reminds me of that lineage. Appreciate you reading.
As for buying a BYD in the US, the geopolitics around that question could fill another essay…
Thank you, once again for the great story. not about the amazing technology, and R&D behind. But more about how the western culture and mindset in the companies "was too big to fall". and now we have ahead of us one of the biggest challenges. Change our European mindset and adapt the quick approach to solution. Change from seeing all the problems and imperfections into seeing opportunities and getting the mindset it can be done with persistence.
Thank you, Alexandra! You've captured what I was hoping to convey. The real story isn't the R&D, it's the mindset behind it. That shift you describe, from cataloguing problems to seeing what's possible, is precisely the muscle Europe needs to build now. Persistence and action beat perfection every time. Sharp observation. Thank you again!
Thank you! You're right that the focus wasn't purely profit. Wang invested 5.6 billion in R&D during a year BYD made only 1.6 billion. That kind of discipline comes from a different place. Thanks for reading!
Thank you for another interesting article. Yes, it is all about how we see a problem, work with and solve it. One of the scariest responses to innovation which is either unrecognizable, or perceived as being subpar: arrogance. Nokia was shocked, but placed an order because they knew that the product and price couldn't be rivaled easily. On the other hand, Musk shows arrogance and has infrequently shown a profit. Whose approach to product development is better? In my opinion, the one who really wants to understand the problem and works relentlessly to solve it, instead of brushing it aside, as we have seen in some recent events from Tesla, is key. Owning the problem and solving it properly, builds trust with one's investors, and I would include those who purchase one's product as investors. I think that BYDs approach is good. Wang Chuangfu didn't start out to conquer the world - he started out to conquer problems. I think that he's doing that.
Thank you so much, Michael! I love how you put it: "He didn't start out to conquer the world, he started out to conquer problems." That really captures the spirit of what I saw in Shenzhen. And you're so right about Nokia. They looked past appearances and trusted the data.
Se opravičujem. Deluje strašljivo. Ne bom o razlogih za uspeh. Si jih kar nekaj povzel. Osredotočil bi se na ostalih 500, 5.000, 50.000..., ki pa niso uspeli in so propadli. Svetovna ekonomija bo zelo kmalu temeljila le na nekaj velikih igralcih. Predvsem v panogah, ki proizvajajo globalne izdelke v velikih količinah. Kaj bodo delali tisti, ki ne bodo delali v teh korporacijah? Kakšna je recimo sploh rešitev za Evropsko avtomobilsko industrijo? Spet carine in uvozne omejitve? Z znanjem in tehnologijo takšnim, kot je BYD ne moremo več konkurirati. Zbudili smo leva, ki je tisočletja spal! Sem pa spet navdušen nad tvojim enostavnim in transparentnim povzemanjem. Tudi ti si kot "Wang"! Le na drugem področju. Čestitke.
Thank you for this. You're raising the question that doesn't get asked enough: what about the other 500 that didn't make it? For every BYD there are hundreds of companies that bet everything and lost. That's the story markets don't like to tell.
On Europe: tariffs buy time, not solutions. The only long-term path is competing with discipline, not protection. That's hard. But the alternative, just closing the doors, is slow decline.
The Wang comparison is far too generous, but I'll take it in the spirit it was meant. Hvala.
"That practice, reproducing failure on purpose until the physics revealed itself" - had never heard of that approach, how interesting.
Well there is quite a generation of engineering leaders over there. Humility and boldness. Both unfortunately tend to not last over a generation, but we'll see in the case of China.
JB, that's the honest question. Humility and boldness are founder traits, and founder traits are notoriously hard to institutionalize. The reproduce-it-100-times discipline works because Wang enforces it personally.
Whether it survives him is a question mark still… Hopefully, as BYD has 110,000 people in R&D, even if a fraction of them internalized the method rather than just following the boss, it may stick for another decade. We don’t know… so you're right to be skeptical.
History is not kind to second generations. I can think of Sony, Circuit City, and many many others. Thank you so much for reading.
Yeah. I think the Chinese system, where political power is strong enough to be independent of economic power, may prove superior in at least this trait: that it will not modify laws to keep the incumbents from having to compete. So companies like BYD will either keep being great or be replaced by new competitors in the ruthless darwinism that's imposed on them.
That is no endorsement of the system as a whole, just seeing that it doesn't seem to suffer from the oligarchic failure mode that's screwing up the US and the West in general now.
You've put your finger on something underappreciated. Nearly 500 Chinese EV companies entered the market. Most are dead. The system let them die. BYD itself barely survived 2019 when subsidies were cut. That Darwinian pressure is real, and it produces a very different kind of survivor than a system where incumbents can lobby for protection.
It cuts both ways, of course. Now that there is a national champion, does the sunk cost fallacy kick in? Whether competition stays sharp in the coming decades is the question worth watching.
You have gone beyond Christensen - your diagram is the Life Cycle Management of Innovation itself. When CFOs are asked what is the cost of the product creation - the very source of value in enterprises, they have no clue how to find this, it never resides in any chart of accounts.
BYDs of the world have led this new business model of innovation. You must expand this - it goes much beyond Christensen. Thank you for enlightening us.
Procyon, the CFO point is devastating and correct: the most important capability a company builds never shows up as a line item. It's buried across headcount, equipment, failed prototypes, scrapped batches, and years of iteration that accounting treats as cost, not investment.
Wang poured 5.6 billion RMB into R&D in a year when net profit was 1.6 billion. No chart of accounts would call that rational. But it was the move that made everything after it possible.
You're right that what BYD did was climb across industries, not just up within one. Each rung built capabilities that transferred laterally in ways the incumbents couldn't see, let alone price. I want to expand on this. Thank you for pushing the thinking further.
Oh thank you, thank you! I really struggled with this piece earlier because the narrative felt a little flat, so hearing what you said about the final version really made my day. Thanks a lot for taking the time to read it!
You made the BYD leadership seem world class, driven, and formidable, but not just because of talent or hard work but can-do spirit and that deep, relentless commitment to best business principles, learning, excellence, and continuous improvement. Something China can be justifiably proud of, that's for sure. I pray it finally lights the needed fire under America's ass, "sputnik moment"-style.
Thank you. That "Sputnik moment" framing is apt. The original Sputnik didn't just scare America. It galvanized an entire generation of engineers, scientists, and policymakers into action. Glad the piece connected. Appreciate you reading.
Thanks, Howard, for another very thoughtful and quite simply compelling analysis. As others have surely told you, answers lie in our stories, and so often, in yours.
When told honestly, I believe true progress for humanity is achievable. If we lose our ability to tell and learn from these stories, or try to make up phony ones to hide our incompetence or simple lack of success behind politics, posturing, or just choosing powerful allies in the hope nobody notices, we've lost our future.
It's clear to me that BYD is not perfect by any measure. But boy, are they trying to do things right and listening to their customers and "smarter people" they're not afraid to acknowledge as such. And that humble, if always disciplined approach to quality and relentlessly repetitive testing is as good a start (and tonic and driver of positive possibilities for future operations) as any company or organization could aspire to. I just hope they're rewarding their employees, customers, and communities where all work with authentic and lasting encouragement and real incentives to keep going toward a brighter future for humanity. Otherwise, why bother, in the end?
Scott, thank you. This means a lot. You've landed on something I care about deeply: the difference between a story told to impress and a story told to teach.
The BYD story works precisely because it includes the burned lab, the taxi fire, the plasticky sedans, the FDA failures. Strip those out and you get propaganda. Leave them in and you get something people can actually learn from.
Your closing question is the right one to ask. A million-person workforce and 110,000 engineers is extraordinary, but scale like that only holds if the people inside it feel the mission is theirs, not just management's. That's the chapter still being written.
As you might guess by now, Howard, I'm an Austen fan and a "Persuasion" junkie, and the first thing coming through my mind was, this is one more example real-life "Persuasion" & "Captain Wentworth". (I said the same before about Zhang Yong and Haidilao).
Uncannily similar storyline - orphaned by his teens, youngest of three siblings, started a career with minimal financial resources, albeit amazing personal ability. And fought insanely adverse odds to come out successful.
And you also showed that this isn't just luck. In fact, more than luck, it's discipline, diligence and rigour. Test and iterate "at inhuman speed", learning faster simply because they're willing to fail faster and improve after every failure.
"Persuasion" is a story about the Navy disrupting the landed gentry, and now we're seeing the same ideas, same stories applying to various real life, contemporary situations of economy and industry disruption. Austen was a genius at capturing the nature of humans and society!
Hwei Yi, I love this connection. I hadn't thought of Wentworth, but now I can't unsee it. The parallels are almost too neat: orphaned young, minimal capital, dismissed by the establishment, returns years later having built something the establishment can't ignore.
And Austen's core insight in Persuasion is that the Navy men succeed precisely because they earned everything through merit and risk, while the landed gentry coasted on inheritance. That is the BYD story. That is the disruption story.
The Haidilao parallel is sharp too. Zhang Yong and Wang Chuanfu share that same quality: not genius in the romantic sense, but relentless, almost obsessive discipline applied over decades. The kind of success that looks like luck only if you skip the middle chapters.
Austen understood disruption two hundred years before Christensen gave it a name. What a frame. Thank you for this.
The equation on the factory stays for a while, Human + Fixture = Robot. To my view, most organisations would have seen the capital gap as a reason to stop. Wang saw it as a design constraint. And design constraints, in the right hands, produce more innovation than unlimited budgets ever do.
What strikes me from a business analysis perspective: the 'reproduce the defect 100 times' discipline is exactly what rigorous requirements look like in practice. Not a plausible explanation. A reproducible one. Most organisations settle for the former and wonder why the same problems keep returning.
The cell that didn't catch fire was thirty years of unglamorous, load-bearing work. That's the part nobody puts in the case study — until someone like you does. Thank you for this, Howard.
Lina, this is one of the sharpest comments. You've put your finger on something I've been thinking about since the visit: the gap between "plausible" and "reproducible" is where most organisations quietly lose the plot. They fix the symptom, write a post-mortem, and move on.
Wang's insistence on reproducing failure until the physics reveals itself is uncomfortable precisely because it's slow, but, a huge but, it's the reason BYD doesn't make the same mistake twice.
Thank you, Howard, the “plausible vs. reproducible” distinction is exactly the line most organisations never examine to my view. Appreciate this exchange.
Amazingly helpful piece, Howard. I remember my first visit to China in 2000. The drive of the people, the hunger for success, the determination… the whole generation of super ambitious people who are in fact changing the world now.
Thank you, Maciej. 2000, that's early! You saw it before most of the world was paying attention. What struck me in Shenzhen was exactly what you describe: not just ambition, but a specific kind of disciplined hunger.
The people I met weren't chasing shortcuts. They were grinding through the physics. Twenty-five years later, that generation is running the show. Appreciate you reading!
An excellent analysis on how BYD became successful. Too many organisations are preoccupied with fire fighting problems daily and never innovate .
Great article Howard. Inspiring but, as others have said, puts the focus on the disciplined and relentless pursuit of solving problems. A couple of years ago i bought my third Hyundai Tucson (sequential, not at the same time). It’s a nice vehicle, but i had really wanted a plug in hybrid, which they don’t make. About 2 months later i came across a BYD display and saw a virtually identical vehicle, plug in hybrid, really nicely fitted out. I can see that in 2-3 years my next car will likely be a BYD, and probably fully electric as they conquer the energy density and range issues. If only all companies could be as devoted to improvement in the way that they are.
Thank you! That's exactly the kind of moment that should keep Hyundai's leadership up at night. You were already a loyal repeat customer, three Tucsons deep, and they simply didn't have what you wanted…
The product was right there on the floor. That gap between what incumbents offer and what customers are ready for is where disruption happens. Appreciate you sharing the story!
Fantastic article! I’ve waited for this story. Thanks so much. When can I buy my BYD car? It is so interesting that the personality of the owner comes through as quality in the product itself. I know a story of an American company that did that in 1950. Tektronix. Thanks.
Randall, thank you. The Tektronix comparison is spot on. It was the same obsession with the instrument itself, not the marketing of it. When the founder's identity is inseparable from the product's integrity, you get a very different kind of company.
Wang Chuanfu reminds me of that lineage. Appreciate you reading.
As for buying a BYD in the US, the geopolitics around that question could fill another essay…
Powerful concepts, powerfully written. Well done!
Brent, thank you! This means so much to me. So glad that it resonates.
Thank you, once again for the great story. not about the amazing technology, and R&D behind. But more about how the western culture and mindset in the companies "was too big to fall". and now we have ahead of us one of the biggest challenges. Change our European mindset and adapt the quick approach to solution. Change from seeing all the problems and imperfections into seeing opportunities and getting the mindset it can be done with persistence.
Thank you, Alexandra! You've captured what I was hoping to convey. The real story isn't the R&D, it's the mindset behind it. That shift you describe, from cataloguing problems to seeing what's possible, is precisely the muscle Europe needs to build now. Persistence and action beat perfection every time. Sharp observation. Thank you again!
If we ever needed guidance on how to be… and we need it more than ever… this is an exceptionally good example of HOW!
The focus is not PURELY PROFIT.
What’s the western goal of business. PURE PROFIT? Nothing else.
The US deserves to lose! Especially Tesla! Totally useless company for the world.
Thank you! You're right that the focus wasn't purely profit. Wang invested 5.6 billion in R&D during a year BYD made only 1.6 billion. That kind of discipline comes from a different place. Thanks for reading!
Have to comment to support the best Substacker I know!
Another home run!
🙏
You're far too kind. Thank you for the support, it really means the world. Glad you enjoyed this one!
I thank you. Definitely not too kind… YOU DESERVE IT.
Thank you for another interesting article. Yes, it is all about how we see a problem, work with and solve it. One of the scariest responses to innovation which is either unrecognizable, or perceived as being subpar: arrogance. Nokia was shocked, but placed an order because they knew that the product and price couldn't be rivaled easily. On the other hand, Musk shows arrogance and has infrequently shown a profit. Whose approach to product development is better? In my opinion, the one who really wants to understand the problem and works relentlessly to solve it, instead of brushing it aside, as we have seen in some recent events from Tesla, is key. Owning the problem and solving it properly, builds trust with one's investors, and I would include those who purchase one's product as investors. I think that BYDs approach is good. Wang Chuangfu didn't start out to conquer the world - he started out to conquer problems. I think that he's doing that.
Thank you so much, Michael! I love how you put it: "He didn't start out to conquer the world, he started out to conquer problems." That really captures the spirit of what I saw in Shenzhen. And you're so right about Nokia. They looked past appearances and trusted the data.
Se opravičujem. Deluje strašljivo. Ne bom o razlogih za uspeh. Si jih kar nekaj povzel. Osredotočil bi se na ostalih 500, 5.000, 50.000..., ki pa niso uspeli in so propadli. Svetovna ekonomija bo zelo kmalu temeljila le na nekaj velikih igralcih. Predvsem v panogah, ki proizvajajo globalne izdelke v velikih količinah. Kaj bodo delali tisti, ki ne bodo delali v teh korporacijah? Kakšna je recimo sploh rešitev za Evropsko avtomobilsko industrijo? Spet carine in uvozne omejitve? Z znanjem in tehnologijo takšnim, kot je BYD ne moremo več konkurirati. Zbudili smo leva, ki je tisočletja spal! Sem pa spet navdušen nad tvojim enostavnim in transparentnim povzemanjem. Tudi ti si kot "Wang"! Le na drugem področju. Čestitke.
Thank you for this. You're raising the question that doesn't get asked enough: what about the other 500 that didn't make it? For every BYD there are hundreds of companies that bet everything and lost. That's the story markets don't like to tell.
On Europe: tariffs buy time, not solutions. The only long-term path is competing with discipline, not protection. That's hard. But the alternative, just closing the doors, is slow decline.
The Wang comparison is far too generous, but I'll take it in the spirit it was meant. Hvala.
"That practice, reproducing failure on purpose until the physics revealed itself" - had never heard of that approach, how interesting.
Well there is quite a generation of engineering leaders over there. Humility and boldness. Both unfortunately tend to not last over a generation, but we'll see in the case of China.
JB, that's the honest question. Humility and boldness are founder traits, and founder traits are notoriously hard to institutionalize. The reproduce-it-100-times discipline works because Wang enforces it personally.
Whether it survives him is a question mark still… Hopefully, as BYD has 110,000 people in R&D, even if a fraction of them internalized the method rather than just following the boss, it may stick for another decade. We don’t know… so you're right to be skeptical.
History is not kind to second generations. I can think of Sony, Circuit City, and many many others. Thank you so much for reading.
Yeah. I think the Chinese system, where political power is strong enough to be independent of economic power, may prove superior in at least this trait: that it will not modify laws to keep the incumbents from having to compete. So companies like BYD will either keep being great or be replaced by new competitors in the ruthless darwinism that's imposed on them.
That is no endorsement of the system as a whole, just seeing that it doesn't seem to suffer from the oligarchic failure mode that's screwing up the US and the West in general now.
You've put your finger on something underappreciated. Nearly 500 Chinese EV companies entered the market. Most are dead. The system let them die. BYD itself barely survived 2019 when subsidies were cut. That Darwinian pressure is real, and it produces a very different kind of survivor than a system where incumbents can lobby for protection.
It cuts both ways, of course. Now that there is a national champion, does the sunk cost fallacy kick in? Whether competition stays sharp in the coming decades is the question worth watching.
You have gone beyond Christensen - your diagram is the Life Cycle Management of Innovation itself. When CFOs are asked what is the cost of the product creation - the very source of value in enterprises, they have no clue how to find this, it never resides in any chart of accounts.
BYDs of the world have led this new business model of innovation. You must expand this - it goes much beyond Christensen. Thank you for enlightening us.
Procyon, the CFO point is devastating and correct: the most important capability a company builds never shows up as a line item. It's buried across headcount, equipment, failed prototypes, scrapped batches, and years of iteration that accounting treats as cost, not investment.
Wang poured 5.6 billion RMB into R&D in a year when net profit was 1.6 billion. No chart of accounts would call that rational. But it was the move that made everything after it possible.
You're right that what BYD did was climb across industries, not just up within one. Each rung built capabilities that transferred laterally in ways the incumbents couldn't see, let alone price. I want to expand on this. Thank you for pushing the thinking further.
A truly great article, informative, entertaining, riveting. Congratulations on a job very well done.
Oh thank you, thank you! I really struggled with this piece earlier because the narrative felt a little flat, so hearing what you said about the final version really made my day. Thanks a lot for taking the time to read it!
You made the BYD leadership seem world class, driven, and formidable, but not just because of talent or hard work but can-do spirit and that deep, relentless commitment to best business principles, learning, excellence, and continuous improvement. Something China can be justifiably proud of, that's for sure. I pray it finally lights the needed fire under America's ass, "sputnik moment"-style.
Thank you. That "Sputnik moment" framing is apt. The original Sputnik didn't just scare America. It galvanized an entire generation of engineers, scientists, and policymakers into action. Glad the piece connected. Appreciate you reading.
Thanks, Howard, for another very thoughtful and quite simply compelling analysis. As others have surely told you, answers lie in our stories, and so often, in yours.
When told honestly, I believe true progress for humanity is achievable. If we lose our ability to tell and learn from these stories, or try to make up phony ones to hide our incompetence or simple lack of success behind politics, posturing, or just choosing powerful allies in the hope nobody notices, we've lost our future.
It's clear to me that BYD is not perfect by any measure. But boy, are they trying to do things right and listening to their customers and "smarter people" they're not afraid to acknowledge as such. And that humble, if always disciplined approach to quality and relentlessly repetitive testing is as good a start (and tonic and driver of positive possibilities for future operations) as any company or organization could aspire to. I just hope they're rewarding their employees, customers, and communities where all work with authentic and lasting encouragement and real incentives to keep going toward a brighter future for humanity. Otherwise, why bother, in the end?
Scott, thank you. This means a lot. You've landed on something I care about deeply: the difference between a story told to impress and a story told to teach.
The BYD story works precisely because it includes the burned lab, the taxi fire, the plasticky sedans, the FDA failures. Strip those out and you get propaganda. Leave them in and you get something people can actually learn from.
Your closing question is the right one to ask. A million-person workforce and 110,000 engineers is extraordinary, but scale like that only holds if the people inside it feel the mission is theirs, not just management's. That's the chapter still being written.
Appreciate you reading so thoughtfully!
As you might guess by now, Howard, I'm an Austen fan and a "Persuasion" junkie, and the first thing coming through my mind was, this is one more example real-life "Persuasion" & "Captain Wentworth". (I said the same before about Zhang Yong and Haidilao).
Uncannily similar storyline - orphaned by his teens, youngest of three siblings, started a career with minimal financial resources, albeit amazing personal ability. And fought insanely adverse odds to come out successful.
And you also showed that this isn't just luck. In fact, more than luck, it's discipline, diligence and rigour. Test and iterate "at inhuman speed", learning faster simply because they're willing to fail faster and improve after every failure.
"Persuasion" is a story about the Navy disrupting the landed gentry, and now we're seeing the same ideas, same stories applying to various real life, contemporary situations of economy and industry disruption. Austen was a genius at capturing the nature of humans and society!
Hwei Yi, I love this connection. I hadn't thought of Wentworth, but now I can't unsee it. The parallels are almost too neat: orphaned young, minimal capital, dismissed by the establishment, returns years later having built something the establishment can't ignore.
And Austen's core insight in Persuasion is that the Navy men succeed precisely because they earned everything through merit and risk, while the landed gentry coasted on inheritance. That is the BYD story. That is the disruption story.
The Haidilao parallel is sharp too. Zhang Yong and Wang Chuanfu share that same quality: not genius in the romantic sense, but relentless, almost obsessive discipline applied over decades. The kind of success that looks like luck only if you skip the middle chapters.
Austen understood disruption two hundred years before Christensen gave it a name. What a frame. Thank you for this.
The equation on the factory stays for a while, Human + Fixture = Robot. To my view, most organisations would have seen the capital gap as a reason to stop. Wang saw it as a design constraint. And design constraints, in the right hands, produce more innovation than unlimited budgets ever do.
What strikes me from a business analysis perspective: the 'reproduce the defect 100 times' discipline is exactly what rigorous requirements look like in practice. Not a plausible explanation. A reproducible one. Most organisations settle for the former and wonder why the same problems keep returning.
The cell that didn't catch fire was thirty years of unglamorous, load-bearing work. That's the part nobody puts in the case study — until someone like you does. Thank you for this, Howard.
Lina, this is one of the sharpest comments. You've put your finger on something I've been thinking about since the visit: the gap between "plausible" and "reproducible" is where most organisations quietly lose the plot. They fix the symptom, write a post-mortem, and move on.
Wang's insistence on reproducing failure until the physics reveals itself is uncomfortable precisely because it's slow, but, a huge but, it's the reason BYD doesn't make the same mistake twice.
Thank you for reading so carefully.
Thank you, Howard, the “plausible vs. reproducible” distinction is exactly the line most organisations never examine to my view. Appreciate this exchange.
Too kind. Thanks for reading it so deeply, as always!
Amazingly helpful piece, Howard. I remember my first visit to China in 2000. The drive of the people, the hunger for success, the determination… the whole generation of super ambitious people who are in fact changing the world now.
Thank you, Maciej. 2000, that's early! You saw it before most of the world was paying attention. What struck me in Shenzhen was exactly what you describe: not just ambition, but a specific kind of disciplined hunger.
The people I met weren't chasing shortcuts. They were grinding through the physics. Twenty-five years later, that generation is running the show. Appreciate you reading!
“Disciplined hunger” is exactly it!
oh yeah!