Jeremy Arnold

There’s this metaphor in Chinese business strategy that you see all the time, even though you never really hear it in Western business schools (at least I haven't). It’s called the “catfish effect,” and it supposedly comes from a Norwegian fishing practice. Apparently, when fishermen would transport sardines in tanks, a lot of them would die along the way because they’d stop moving and run out of oxygen. But if you put a single live catfish into the tank, the sardines would stay active, swimming constantly to avoid getting eaten, and more of them would survive the journey. The catfish made the environment slightly hostile, which weirdly made it more survivable. This story kind of floated around in Western motivational books for a while, but it never really stuck in business theory the way things like disruptive innovation or lean operations did. In China though, the idea of the catfish effect, or 鲶鱼效应, became pretty popular in corporate training settings and state-aligned business commentary, and it's pretty obvious that a main reason for that is cultural. There’s just more acceptance of discomfort as a developmental tool, and less hesitation to design pressure into the system from the top down. It’s not “disruption” as a natural market phenomenon, it’s more like managed agitation. Like, let’s introduce a little stress on purpose, because stagnation is the bigger risk here. And yeah, I'm sure some will disagree with this example, but in China, Tesla's arrival is considered a clear-cut case of the catfish effect in policy. At the time, the government was pretty frustrated with its domestic EV scene. The subsidy program, although improved from the decade prior, had still led to all kinds of abuse and fraud, with a bunch of half-baked companies just trying to cash in on government money without building anything truly innovative. It was getting embarrassing. So the government said, okay, fine. Let’s put a catfish in the water. They gave Tesla this rare set of approvals -- full ownership of their China operations, fast-tracked factory deals, land, logistics support -- the works. It was a provocation. Like, hey all of y'all Chinese companies, you guys need to be way faster cuz here comes the catfish. Swim! And sure, it wasn't all because of Tesla, but the pace of innovation has indeed picked up since then, in operations, design, user experience, everything. This is where it really differs from how Western business theory tends to approach competition. In the US, you see a lot more disruptive innovation. In China, competition can be curated, introduced, even welcomed -- not to destroy the domestic players, but to get them moving again. Of course, it doesn’t always work. Sometimes the catfish is too strong, or the sardines were already too weak. And sometimes you get eaten, LOL. But it's an interesting question -- is that tank you're in the best environment for you? Are you swimming because you want to, or because you finally have to?