You're listening to Roundtable with myself, He Yang.
I'm joined by Steve Hatherly and Li Yi in the studio.
Coming up, they say science is built on curiosity.
But what happens when failure gets punished?
The city of Shenzhen has just made a new move.
Researchers who try and failed responsibly... will no longer face penalties.
Could this mark the beginning of a culture that dares to ask more, risk more, and think beyond what's safe?
After all, isn't trial and error how we've discovered new ideas, built new businesses, and moved the world forward?
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Now let's switch gears. State-owned funds have long played it safe, worried that any misstep might be seen as a loss of public assets and someone will have to take the blame.
But that caution creates a real dilemma.
How do you spark scientific breakthroughs when the system is built to fear failure?
At its core, science is about exploring the unknown, and failure is part of the deal.
Now, Shenzhen, China's longstanding frontier of reform and opening up, is shifting the rules.
It's rolling out a policy that allows failure in state-funded research, creating a space for scientists to take risks, stumble, and try again without losing support.
So what could this new policy mean for the future of tech, business and innovation itself?
So why Shenzhen? Why is this city taking the lead in rethinking how we treat failure in research?
Because if any place in China was built on risk, reinvention and relentless ambition, it's Shenzhen.
It's one of China's four biggest cities. a first-tier powerhouse, the world's fifth-largest financial center, and often called China's Silicon Valley.
As of this year, Shenzhen ranks third in city-level GDP across China, right after Shanghai and Beijing.
It's also a true city of immigrants where bold ideas, big dreams and nonstop innovation come together.
And now you know what Shenzhen is all about.
So what exactly is Shenzhen's new failure tolerance policy and how does it change the rules for state funded research?
Well, this is a new or recent guideline released by the local government today. and which is believed to embrace or being more tolerant about failure.
Based on this guidance, if a unit or individual is found to have acted with due diligence, meaning that researchers or organizations did their work responsibly and followed proper producers, they won't be held accountable even if their project didn't succeed.
The failure won't affect their performance evaluations nor their application for government funding for future science and technology projects.
And also, this new guideline applies to all tech innovation activities founded by the government in Shenzhen, including public institutions such as universities, research institutes, healthcare organizations, as well as companies and their staff involved in tech management or scientific research activities.
So all in all, this sort of new guideline is sort of encouraging innovation and also tolerating failure because we all know that when it comes to scientific researches, failure is actually the norm.
Yeah, I didn't hear you say media companies in that list.
No, we can't fail. Well, you know, failure is, I don't know if we say failure is the norm or not, but I mean, that's how you innovate in science, right?
So the value... There's so much value in giving researchers room to fail.
It kind of speaks for itself, because when those scientists, when those researchers fail. when they have that space, it really encourages innovation.
And it's how we move forward, I think, with new tech and new advancements in medicine and so many other industries is by trial and error.
You try things and then you try again and then you try again until you actually get it right.
Yes. And I think it's also worthwhile for us to go through exactly what counts as failure with no blame under Shenzhen's new guidelines.
Yes, there are actually several preconditions.
First of all, researchers have to show they acted responsibly.
That means they follow the right decision making processes.
Staying aligned with strategic goals and they are not really abusing their position.
They're taking initiatives and they're fixing mistakes when they spot them.
And also the guideline lay out five conditions for being considered diligent and responsible, which includes selflessness.
Staying aligned with strategic goals and follow scientific and democratic decision-making processes.
Avoid abuse of power for personal gain, taking initiative and responsibility, actively correcting mistakes.
And meantime, there are nine kinds of situations where researchers and their institutions can be exempt from responsibility.
And these are pretty complicated situations.
And please tolerate me when I introduce these scenarios.
And they include, first of all, when project directors clearly show they fulfilled their duties, but still couldn't finish the work.
The second one, filling an assessment in milestone or horse race style competitive projects.
These projects, meaning that they can be highly risk and competitive and in milestone based project, teams might hit technical bottlenecks or face sudden market shifts and in horse race projects.
And not every team can win because sometimes losing simply meaning that another team was faster.
So in this case, they are just eligible for exemption.
And the third one is providing funding or venture capital for innovative, disruptive, forward-looking high-risk technologies.
And then projects that have to stop or can't be complicated because of events completely beyond anyone's control.
That makes sense. And then picking a technical route that turns out to make the project's goals unachievable.
And then key technologies being unexpected, polished by others, making the project unnecessary. and then successfully developing the project, but market changes make further industrial application pointless, and trying new mechanisms, methods, models, or technologies that end up being unworkable.
Here's the last one. Any other situations recognized under national Guangdong provincial or Shenzhen regulations?
You're welcome. Thank you. Just wanted to give you a chance to have a sandwich or something there.
Great cooperation happening right here on Roundtable.
Why is Shenzhen's failure tolerance policy emerging now?
And what broader challenges in China's research and funding system does it respond to?
Well, this year, there were a lot of Chinese provinces and cities that have introduced policies related to accountability exemptions for science and technology innovation.
And this is helping to accelerate the country's efforts to to build a system that does indeed encourage innovation and that does indeed support responsibility taking and tolerates failure.
The approach from Shenzhen is just a very notable example.
And we should point out as well is that, you know, these types of policies, it's not freedom to be irresponsible.
Right? It's not that at all. There are a lot of boxes, as Lee just went over, that need to be checked, right?
So... Doing all of those things is what's necessary.
But doing all of those things, it does align with the development status of innovative industries.
And many of these innovations come with a lot of trial and error costs and really long transformation cycles and really significant market risks.
And there's a lot of competition, like you said before.
Sometimes other companies or other teams just get there first and you shouldn't be punished for that.
Until now, in many parts of China, and it's not just China, publicly funded researchers could face penalties when they're using public money to conduct research.
And if things don't pan out, and it can include funding cuts, negative evaluations, or even administrative consequences if their projects fail to deliver promised results, regardless of whether they've done everything appropriately.
And this has led to several problems in the past, such as avoidance of risky, innovative research, and researchers would rather play it safe than try bold ideas, easy to understand, or achievement stretching.
That's exaggerating or inflating process just to pass evaluation.
Get your funding that way. Yeah. And also wasted effort and stress, trying to avoid blame rather than focusing on discovery.
So It seems like with the Shenzhen policy, it's putting its foot down and really trying to encourage innovation that happens with this very important and valuable money that comes from, I would assume, taxpayers or somehow government funds. funding.
And it's not just Shenzhen, right? This year, cities and provinces such as Tianjin, Shandong, Heilongjiang, Jiangsu, and Hainan have also introduced policies on due diligence and exemption from blame in tech innovation.
What is the significance of this move? And what impact do you think it will have on research, discovery, and the funding system?
Well, I think one major significance would be it really encourages a more patient investment and also encourage long-term vision for both researchers and investors.
Because for me, this sort of guideline is somehow like a safety net for researchers and also their investment, especially when it comes to public funding, because failure can really be tolerated.
And in reality, when you look at those cases, private and state investors, they often actually seek quick returns, meaning that they will just rather choose safer and more reliable researchers because that can just make sure that their money invested in a project can be earned back.
But if all capital, you know, flow into those safer projects, maybe we won't really have true innovation.
So one significance is, of course, to encourage this, you know, long term vision. which can truly maybe help to cultivate some really frontier and cut-edging technologies.
And also, I think it also helps to build a cultural environment that really respects experiments and also respects failure as well.
Yeah, and also in certain fields, experiments are just a part of the nature of what it is, right?
We're living in the era of AI now. You don't just create AI by doing one experiment and then moving on to your next project.
It doesn't work like that, right? Biomedicine, that is just trial and error until the scientists can figure out how things work.
And so, therefore, this isn't just a good idea for these types of industries.
This is actually crucial. for them to find new discoveries.
Yes, and that's such a good point. You mentioned AI.
While Shenzhen's new policy pushes public funding to accept failure as part of innovation, the private sector has long embraced this reality.
Take Microsoft's 14 well close to 14 billion us dollar investment in open ii which came up with chat gpt a clear example of big high risk bets on cutting edge technology where success wasn't guaranteed but private investors understand that failure is often the price of breakthrough innovation and that market driven mindset um delivers these kind of rapid progress but with so much money thrown into it and then one kind of need to caution if it's state funded projects then can it afford to do something similar and tolerating failure in research is a big step forward and certainly sort of a change in mindset or at least change in tone when you look at policy but when public funds are involved the stakes are high without strong checks there's room for rent seeking that's when individuals or organizations exploit the system to win funding not to do real work but to cash in on the process This could mean inflating budgets, faking process, or simply writing on vague promises without delivering results.
And that's why due diligence and evaluation mechanisms are very important here.
And the strong guardrails must be in place to keep corruption out and keep the science honest.
But when you look at research, and let's just I mean, keep it short and sweet, I suppose.
This is one aspect, right? Research, discovery.
And do you think that maybe in so many other aspects, including setting up your own business, that's entrepreneurship, and other areas in life, actually, it might be useful to have this, okay, failure...
Failure tolerance is okay. Marriage, it would be good to have.
But do you get a second chance? Can I get funding for that?
Yeah, good question. I think it's worth it in a lot of different industries, perhaps some more recognizable than others.
Have you ever heard, I mean, this goes way back to the 1990s, the Apple Newton message pad.
What was that? It was a 1993 product. It was a PDA.
It was a personal digital assistant. And it absolutely failed commercially.
It was too expensive. It was heavy. It wasn't user-friendly.
But long story short, that led to the iPad.
So, therefore, when we can have this type of freedom to fail, you know, not that Apple wanted to fail with that particular product, but it's just an example that sometimes failing, even though it might be difficult to see in the short term, can lead to something that can change the world in the long term.
I think nowadays, our society is somehow less tolerant in terms of failure, because we always pursue interest, we always pursue efficiency.
And with that sort of attitude, Naturally, I mean, we all know, for example, in this case, we all know that to err is human.
And we all know that scientific research is full of failure.
Failure is norm. But literally, if you are the sponsor, if you are the one who is going to invest in this project, so what kind of projects will you choose?
Naturally, you know, if you see that other team players, maybe in your industry, they're choosing safer projects, you don't want to lose.
But then that's why I think it's really important to have this discussion because the tolerance of failure somehow represents a more, you know, free atmosphere.
Innovative. Innovative. Exciting. Exciting, yes, and inspirational.
I think these are fundamentally important personalities or traits for human beings as well.
It's not only for research industry, not only for entrepreneurship, maybe for marriage, but all in all, I think, you know, giving people the right to, you know, fail.
To explore. Yeah, to explore, to try everything, to try new ideas is really important.
Yeah, I've always wondered, isn't it a bit of a paradox if you're asking somebody setting up a company or committed to the next biggest discovery to say, oh, you promised me results.
Otherwise, I'm not getting you money. But yeah, I
I can't promise you anything. I can only promise you that I'm going that direction.
If I know what the ending is, then everybody can discover.
But that's not how it works. Well, yeah, I guess you asked for another industry before and I gave you another tech example.
Here's something that came to mind. The restaurant industry.
Chefs. Right. Always experimenting with new flavors and new flavor combinations.
And then from that, we get fusion foods and stars end up with Michelin chefs because of their creations.
Right. So being creative definitely applies to way more industries than simply medicine and technology.
Absolutely. And then when you guys, especially when Leigh, you're kind of steering the discussion towards, you know, a wider open ocean.
Human beings in general. Exactly. Sorry.
No, that was brilliant. It should be a very pragmatic discussion. discussion, I thought.
It is very pragmatic, especially, let's say, if we narrow it down, zero it in onto individuals.
And I've seen so many articles, and I feel it, young people who say that, well, when it comes to my own life, there is no chance that Or no acceptance of failure.
And I know Steve and I, we hate the word failure.
And I'm so aggressive. I want to just wipe it out of the dictionary because the F word just sounds so like ominous and so much stress.
But for young people, sometimes you feel like even if you don't have a safety net, and most of us don't, then to fail, or let's use a different word to stumble to fall on your face and picking yourself back up again.
We don't always we can't always shoulder that opportunity cost, and therefore we play it safe in life.
But Yeah, wouldn't it be great if it was a video game and you'd get a second chance, the nth chance to restart?
But life isn't like that. Or if we got state funding for all of these things, that would be great, too.
But you've got to do due diligence. Oh, yeah.
And the state doesn't let you off the hook easily.
That's true. But on Roundtable, we still try our best to sort of crack open this nut a little bit and invite you to maybe see if there is a different way of looking at things and see if there are broader ways to open up our minds to see if there are different ways to tackle the situation in front of you.
And maybe through that, we find different ideas. to what constitutes failure and the probability of bouncing back up is possibly so much bigger than what we assumed.
And that brings us to the end of today's show.
Thank you so much, Steve Hatherly and Li Yi for joining the discussion.
And Li Yi, my pal, come back when you have the time, all right?
We're always opening our doors on Roundtable for you.
So nice to hear that. Such a happy discussion.
And I'm Hei Young. We'll see you next time.
