Why can Huawei mobile phones take Xiaomi from the first throne in the shortest two years? This article provides an interesting reflection of latitude.
"Organizational Power" is the secret of Huawei's constant victory.
In mid-August, the research institute idc released the report on China's smartphone shipments in the second quarter. Huawei's mobile phone shipments were 19.1 million units, with a market share of 17.2%, ranking first; and the former king's millet shipments in the second quarter were only 10.5 million units, with a market share of 9.5%, down 38.4% year-on-year.
Why can Huawei mobile phones take Xiaomi from the first throne in the shortest two years? This article provides an interesting reflection of latitude.
There is a strategic principle in Sun Tzu's Art of War, that is, "the winner wins and then fights for war", which means that the army that wins the battle always has the triumph of grasp before it seeks to engage the enemy with the enemy. Before the war, we must be prepared to create all kinds of conditions that must win, to eliminate the various risks affecting victory, to create a situation in which we have not won first, and then to fight again, then there is no victory.
In the era of mobile internet, how can enterprises become "changed generals"? We believe that the two conditions for creating wins include:
Strategic direction: Does the company continue to find high-profit, high-growth space? This is often said to "find the vents, pigs can fly."
Organizational Capabilities: Does your team execute strategies more effectively than competitors? This can be understood as "for long-term flight, there must be strong wings." Enterprises in the era of mobile internet also have to follow the equation of “sustainable success = strategy & TImes; organizational abilityâ€. The two are multiplication, not additive, which means that both are indispensable.
Failures in the mobile Internet wave are either strategically wrong or have problems with organizational capabilities.
Figure 1 Continuous Success = Strategy & TImes; Organizational Capabilities
Out of dependence on past success paths
Let us first reflect on a few companies that once had the best scenery and ultimately lost.
Kodak - in front of the scenery can not see the front
The world's first digital camera was invented in 1975 by Kodak's camera engineer Steve Sasson, when Kodak executives held the prototype of a 10,000-pixel digital camera and said to him: "This stuff." It's cute, but you don't want to mention it with others.†Kodak didn't pay much attention to continuing research and development after inventing the first digital camera, but wanted to hide the digital imaging technology through patent protection to protect existing products.
By 2000, Kodak, which had been in the monopoly of the film business, realized that it had missed the pain of digital imaging opportunities. From 2000 to 2003, its film business fell by 70%, while digital products accounted for only 22% of its total revenue; 2007 The company began to lose money; in January 2012, Kodak filed for bankruptcy protection.
In this way, the legend of an era has fallen.
Kodak was once the world's largest imaging company, accounting for two-thirds of the global film market. Kodak has never lacked technical reserves. It has stood at the peak of photography technology and has more than 10,000 patented technologies. As everyone knows, outside the scope of patent protection, a large number of digital technologies are coming to the fore. Some companies have taken advantage of Kodak's patented technology while cleverly bypassing the barriers of patent protection and developing cheaper digital products. When Kodak realized the problem. When the severity is too late.
Pepsi - still standing in the original model
Bechda is an audio-visual leasing company. Due to its scale advantage that others can't match, relying on audio-visual leasing chains in various communities, it quickly defeated scattered audio-visual stores. PepsiCo quickly became the US DVD (digital disc) leasing industry giant.
In 1997, a company called Naifei was established. There was no storefront and no salesperson. However, it did a lot of operational optimization. For example, the personalized recommendation system can guide users to watch more old movies and long-tail movies, increase the usage rate of DVD inventory; negotiate with the production party to divide transactions, and reduce the fixed cost of purchasing DVDs. One year after Naifei went public (2003), although the scale of revenue was only 1/20 of that of PepsiCo, it has already achieved profitability at this scale.
Jim Caes, CEO of PepsiCo, once dismissed Naifei. He once declared: "Frankly, I was confused by the love of Naifei. We can do everything we have done. Arrived."
Two years after the establishment of Netflix, PepsiCo may also acquire Naifei for only US$50 million, which is a pocket money for its $5 billion IPO (IPO) in 2001. However, Pepsi has rejected all
Such a choice.
In 2013, PepsiCo went bankrupt.
There are several problems with Pepsi's business model—the storefront rental costs are high, the storefront must rely on manpower operations, and the purchase of genuine DVDs also requires a large expense. Comparing the high fixed cost of PepsiCo (rental storefront, manpower, DVD), Netflix's business model is “lighter†and has also done a lot of operational optimization. The problem with PepsiCo is very similar to that of other fading retailers—not quickly adapting to changing business environments and consumer habits. This closed thinking and misjudgment of the general trend is the key reason for the ultimate bankruptcy of Pepsi.
Nokia - missed opportunities in too many concerns
At the beginning, Nokia was almost synonymous with mobile phones. It had occupied the first place in the market for 14 consecutive years and was a well-deserved mobile boss. However, today it has become a memory, no achievements such as the life classics of advertising, so that too many people sigh for it.
Nokia falls vertically from the corner of the smartphone pyramid, and the iPhone is only an environmental factor. The real reason is that Nokia protects the investment in Saipan. So some media said: "Apple invented the gallows, Android moved it to Nokia... Then, Nokia went on its own..."
In 2009, Android phones only had a 1.6% market share. By 2013, this number magically became 80%, although Nokia executives realized that their phones needed a better operating system than the Saipan system at the time. Competing with Apple's operating system (iOS), and knowing that R&D takes years, but is afraid to publicly admit that Saipan is not as good as people at the time, because it is worried that it will be considered a failure by outside investors, suppliers and consumers. They are thus abandoned by them.
Traditional paper media company - paranoid in the value of depreciation
The Washington Post is the most prestigious newspaper in the United States after the New York Times. The newspaper won the Pulitzer Prize 18 times. It was the first to report on the "Watergate Incident" and eventually led to the resignation of former US President Nixon, making the newspaper famous. In October 2012, the 136-year-old Washington Post was acquired by e-commerce giant Amazon founder Jeff Bezos for $250 million in private.
The acquisition shocked the world, but there is no precedent.
In early August 2012, The New York Times announced that it would sell its Boston Globe and other New England media assets to the main owner of the Boston Red Sox, John Henry, for $70 million. The Boston Globe, which was founded in 1872, has a history of more than 140 years. It was once the largest circulation newspaper in the Boston area, with readers focusing on social elites and intellectuals. In 1993, the New York Times Company took it to the company for $1.1 billion, setting a record for the newspaper's purchase price at the time, but in the end it only sold at a price less than 1/10 of the purchase price.
As consumer reading habits irreversibly shift from offline to online, the emergence of the media, the network will eventually eliminate the barrier between the author and the reader. Therefore, traditional media CEOs headed by newspapers can only face the exit from the historical stage or the low-priced sale if they do not make early arrangements and actively transform.
It is not difficult to win at one time, it is difficult to "two wins". As mentioned earlier, successful companies are the easiest to rely on for their past success, just as people can't grab their own hair and leave the Earth.
Combining four cases, these corporate decision makers who have been admired by the world but ultimately did not become "competitive generals" have two characteristics in common:
(1) Excessive attachment to existing resource advantages and loss of a keen capture of environmental changes;
(2) There is no continuous search for new high-profit, high-growth space.
Driving opportunities in a changing environment
Environmental changes are divided into Incremental Changes and Radical Changes. The environmental structure of the former is stable, and only quantitative changes occur. For example, the impact of price cuts on China Mobile by China Unicom is predictable and controllable. The latter environment has changed in nature. For example, the impact of WeChat on China Mobile is unpredictable and subversive. Mobile internet technology is a structural change.
In an environment of business change, the CEO needs to consider the external environment change when formulating the strategy, and consider the existing resource advantages (such as technology, channels, customers, suppliers, etc.) and organizational capabilities.
However, in the face of structural changes such as mobile Internet, leaders must pay attention to external environmental changes when they formulate strategies, and always maintain crisis awareness and open mind. Only by capturing the clues of change before others can we focus our company's limited resources on high-growth and high-profit spaces.
In the startup stage, the company is in the All In (all-in) state. It is indeed more urgent to find high-value and high-growth space. Once the strategy is wrong, the company will not survive.
Three ways to find high-profit, high-growth space
In nature, there is a small animal, 蚱蜢, whose life habits are very characteristic. Its two hind legs are particularly long, and thick and hard-working muscles are bulged in the upper part of the hind legs. Energy is awkward when walking. When the cockroach is ready to jump, its four calves will hold up the front half of the body, bend the hind legs, and then suddenly straighten out, quickly releasing the stored energy and shooting yourself into the air. Its stunt can skip the equivalent of 15 to 20 times the length of the body, and does not need to run! This leaps forward, 10 times faster than most insects that run on the road.
The body is short and has limited energy, but through a well-arranged movement, it completes a smooth and coherent jump, ensuring the speed that other insects can't match.
Similarly, the resources of the company and the energy of the executives are limited. Every successful advancement requires a careful arrangement of actions like 蚱蜢 to reach a height that other companies cannot reach. So, what are the thoughtful actions to continue to find high-profit, high-growth spaces?
We believe that we can make trade-offs and phased considerations from new customers, new regions, and new business paths to prioritize strategies.
Usually, when the domestic market is large enough (such as China), start with the growth of new customers, and then further develop in new areas or new businesses.
Below, we think about how to find high-profit, high-growth space from the three dimensions of new customers, new regions, and new businesses.
Figure 3 Strategic development direction
new customer
What can companies do to find new customers from existing businesses and existing regions?
First, sell to more customers. Increase customer volume and increase market share or penetration by providing customers with higher value or better experience.
Second, sell more to customers. Cross-sell and personalized recommendations through category expansion to achieve higher average sales from existing customers. In addition, increasing customer loyalty and retention is also a key way to sell more on each customer.
Third, sell to better customers. 20% of customers tend to bring 80% of the company's profits. The company needs to analyze the situation of various customers, provide better services and products around the high-profit customer base, and ensure their retention.
New area
What can a company do if it focuses on its original business?
First, go out. Expand its main business to overseas and globally.
Second, tie it down. Channels, services, etc. will be sunk from first- and second-tier cities to third- and fourth-tier cities, and even lower counties and cities.
new business
What can companies do if they choose a business diversification strategy?
First, related diversity. Based on the main business advantages or mastered user data, enter the industry upstream and downstream or related extension business, and expand new profit growth space. In addition, the iteration of technology has also prompted companies to open up new businesses. For example, as the PC Internet quickly moves to the mobile Internet, many Internet companies must develop new mobile services, or they will not be able to keep up with technological developments and must be eliminated or marginalized.
Second, non-related diversity. Enter a business that is less relevant to the main business. In the era of mobile internet, this strategy needs to be cautious, because once the company is distracted, it is often difficult to do business in the main business. This situation can only be considered in the main business industry space, and the funds generated by the main business exceed the funds required for the financial expansion of the main business.
Jingdong
new customer
First, sell to more customers. Founded in 1998, Jingdong started in computer, communication and consumer electronics (3C products), helping consumers save a lot of shopping costs through multi-, fast, good and provincial e-commerce strategies, plus reputation for quality and quality service. Achieved rapid growth of customers.
Second, sell more to customers. Since 2007, Jingdong has been insisting on a full-category strategy. Because customers are looking for more abundant products in addition to 3C, Jingdong has met their needs.
Third, sell to better customers. For example, Jingdong has done a data analysis, 20% of customers can bring huge profits, and the worst 20% of customers have incurred losses. The data shows that quality customers are crucial to improving profitability.
New area
First, tie it down. Beginning in 2014, JD.com began to implement the “channel sinking†strategy—in rural areas, the price of electricity is 10% to 20% higher than that of e-commerce platforms, which means that there are huge market opportunities in the rural e-commerce market; One of the key bottlenecks in the development of a 6-level city is logistics and distribution. Therefore, Jingdong’s self-built logistics system, which has been built for many years, is quietly covering the 3-6 cities, and through the “Jingdong Bang Service Storeâ€, it combines commodities, main road logistics, publicity, and mobile entrance sinking to systematically solve the problem of home appliances going to the countryside. The "last mile" puzzle.
Second, internationalization. In April 2015, Jingdong officially launched the “Global Purchase†business, and consumers can easily purchase quality products from many countries and regions such as the United States, France, the United Kingdom, and Japan. At the same time, Jingdong will also “go out†and bring the “good quality and good price†Chinese brand to the world, and gradually copy its advanced competitive service mode of “marketing and customer integration†to overseas. The service experience of overseas users.
new business
Relevant diversity. Since 2013, Jingdong founder Liu Qiangdong has decided that every year the company must invest in a big new business. It takes three to five years for this investment to truly generate revenue and create profits for the group. In this context, JD.com focuses on the needs of e-commerce consumers, exerts financial and technological advantages, and provides after-sales value-added services. From the main business of e-commerce, Jingdong Finance (Internet Finance) and Jingdong Home (O2O Service Platform) , Jingdong Intelligent (cloud and big data services) and other related diversified businesses.
Huawei
new customer
First, sell to more customers. Since its inception in 1988, Huawei has faced fierce competition from powerful Western merchants, forcing the strategy of “surrounding the city from the countrysideâ€. Huawei spent 10 years or so tempering the quality and reputation of telecom equipment products and solutions, and expanding and upgrading customers from the earliest and backward county-level post and telecommunications bureaus to national telecom operators. From the product module, before 1999, Huawei mainly sold telecom equipment. After 2000, Huawei increased the R&D and sales of terminal equipment. In 2015, Huawei's terminal sales amounted to nearly 20 billion US dollars. At this time, Huawei has become a comprehensive information technology enterprise group integrating telecommunication equipment and terminal product research and development and sales from a pure telecommunications equipment supplier.
Second, sell more to customers. In the early days of its business, Huawei insisted on investing 10% of its sales revenue every year in research and development, and its product line is continuously enriched. Huawei's products and solutions began with PBX (Programming and Switching) technology for hotels and small businesses that were independently developed in 1990, and expanded to include wireless access, fixed access, core network, transport network, and data communications. The expansion of the business category to the end-to-end solution has enabled the overall needs of telecom operators.
New area
globalization. Going out, Huawei's long-term reserves in research and development and technology, as well as its experience in the Chinese market and Western friends, have laid a solid foundation for its overseas travel. Since 1999, Huawei has adopted the strategy of “Asia, Africa and Latin America†to enter the global market. First, it has made breakthroughs in underdeveloped countries and regions such as Africa, Southeast Asia and Latin America, and then entered high-end markets such as Europe, Japan and Australia.
Huawei's main advantage in entering the international market early is still low cost and low price. Up to now, leading technology, quality products and services, localized organizational strategy and rapid response mechanism have become the core competence of Huawei's international competition. . At present, Huawei's products and solutions have been applied to 170 countries and regions around the world. In 2014, Huawei surpassed Ericsson in the field of telecommunications equipment and became the world's number one.
new business
Relevant diversity. Multi-BG (business group) operations. Since 2009, Huawei has become the second largest telecommunications equipment supplier in the world. In order to maintain its continuous growth and adapt to the revolutionary changes that are taking place in the information industry, Huawei has made strategic adjustments to its customers and is committed to “cloud-tube-endâ€. "Co-development, which means that Huawei extends from a single network equipment business for telecom operators to enterprise business and consumer business, and transforms the organizational model from a functional model for operators to operators, enterprise services and The three business units of the consumer business.
As of the end of 2015, Huawei's sales revenue exceeded US$60 billion, compared with US$32 billion in 2011. The goal of re-creating a Huawei has been achieved in just four years. Among them, consumer business sales revenue of more than 20 billion US dollars, accounting for 1/3 of Huawei's total revenue, has been in the turning point of changing the industrial structure, the strategic opportunity for global rise.
If you find the outlet, can the company fly?
There is a famous saying in the Internet industry: "Standing in the wind, pigs can fly." That is to say, companies are looking for a strategic direction, and others are not the key. Nothing is wrong, find the right strategy, the company will follow the trend, easy to grow fast, fools can also make a fortune, pigs can fly.
Affected by the "wind-speaking theory", many people think that the most important thing in the era of mobile Internet is strategy, and organizational ability is not important. In fact, it is not enough to focus on the strategy alone – since it is a “pigâ€, how long can it fly? Grasping the wind, the company will become bigger and bigger, which will greatly increase the complexity of internal management. When competitors see the wind, they can quickly turn the blue ocean into the Red Sea. Therefore, the vents can only provide a time window for the enterprise. Without strong wings, the "pig" will eventually fall down heavily.
Enterprises find the right direction and establish a business model that is in line with the mobile Internet era. The next challenge is whether your team can implement new strategies faster and better than competitors. Organizational ability can become a "competitive general" "It becomes very crucial."
More difficult to build organizational capabilities
Although both strategic and organizational capabilities are important, the latter is more difficult to compare. Chinese entrepreneurs are very sensitive in their business sense and often can catch the "big wind", but if the team can't fight, even if they see the fat, they can't eat it.
For example, in the Internet industry, the “search engine + advertising†model that pushed Google to the peak was actually invented by Yahoo. The difference in team execution led to Google’s glory and Yahoo’s decline. BAT stands out from many competitors. In fact, their strategic direction and business model are not completely original. It is because the team can execute the company strategy faster and better than the competitors in China. For example, Mi Chat and WeChat, Meituan and Comments, the strategy is convergent, and the key to winning is whether the team can execute the strategy faster and better than the competitors.
Organizational ability is not easy to be copied
The new strategy of learning and replication is not difficult. The organizational ability to effectively implement these strategies is not easy to replicate, and must be built with long-term intentions.
Also in the vent, if there is no matching and robust organizational capabilities, the leading edge of the enterprise will be difficult to sustain.
Xiaomi is a classic example. With new cost-effective product design and innovative marketing tools, Xiaomi has created a miracle with a turnover of more than 10 billion yuan in three years. But after a few years, looking at it, the companies that replicate the Xiaomi mobile phone model are surging. For Xiaomi to continue to be successful, it is also necessary to calm down and learn about Huawei's organizational skills.
Huawei vs Millet: Tortoise and Hare Racing, winning the organizational ability
Xiaomi has played a dark horse role in the Chinese mobile phone market, winning a global media attention from a newcomer who has not been seen, and becoming a leading player with a significant market share.
However, by the end of 2015, according to a research report by market research firm TrendForce, Huawei’s mobile phone shipments reached 109 million units, while Xiaomi’s 72.4 million units did not meet the “80 million units set at the beginning of the year. With the goal of 100 million units, the market share gap between Huawei and Xiaomi has increased to 1.5 times.
The early outbreak of Xiaomi was the choice of the feng shui. Its pioneering “Internet mobile phone†model with high cost performance and hunger marketing as the core element brought a conceptual earthquake to Chinese mobile phone operators. Almost all Chinese mobile phone companies “have already In the imitation of Xiaomi, or on the way to imitate Xiaomi, competitors in the Chinese market have adopted the strategy of “replicating millet to suppress Xiaomiâ€, including Huawei-Huawei “Glory†brand new mobile phone sales can be 100 from within one year. The tens of thousands of units increased to 20 million, the secret is to "copy" the millet business model.
In this tortoise and the hare, Huawei finally left Xiaomi behind. Huawei wins the leading technology research and development strength and patent library and business internationalization.
Technology research and development and patents
In terms of product development and industrial design, Huawei's progress is very obvious. It began to evolve from plastic body to metal body. In the second half of 2015, as the most direct proof of its R&D and design strength, Huawei and Google cooperated to develop two of this year. A larger, more expensive version of the Nexus brand of high-end smartphones.
Huawei has always been a world-class telecommunications equipment manufacturer, which makes Huawei's technology accumulation and patents in the field of mobile communications far exceed other Chinese competitors such as Xiaomi. According to one data, Huawei has more than 12,000 invention patents on mobile phones and only 10 from Xiaomi. Huawei's own brand of Kirin chips enables Huawei to launch mobile phones with world-class performance. For example, in the use of pressure-sensitive screens, Huawei even leads Apple.
Business internationalization
Driven by the internationalization of telecom equipment business, the internationalization of Huawei's smartphone business is far ahead of Xiaomi. Xiaomi is called "China's apple", but Huawei has already achieved "the world's unique Huawei."
After the attack on the US market was blocked, Huawei's mobile phone business focused on the European market. Many high-end mobile phones chose to hold a press conference in London, and Huawei's mobile phone business also established R&D and other branches overseas.
Due to long-term business, Huawei's international brand awareness has been low for a long time, and many foreigners cannot even accurately say the "Huawei" brand. In the past few years, Huawei has started a big brand marketing. According to reports, Huawei has sponsored more than 30 football clubs in several countries, including the Italian AC Milan Club. For the second year in a row, 2014 and 2015, Huawei entered the international brand group (Interbrand)'s list of the world's top 100 commercial brands, which is the only Chinese brand on the list.
Having resources and burning money does not mean that the strategy can be implemented.
In the era of mobile internet, the business war was extremely cruel. Take the O2O field as an example. In order to sprint the land, it is inevitable that the company will burn money. Therefore, many people think that they must be able to fool investors, have the ability to finance, and having money to burn is the key to success, not organizational ability.
Of course, mobile Internet companies need to quickly achieve network effects, and burning money is a must. But the question is why are investors willing to invest a lot of money in these companies? Ultimately, it is the recognition of the strategic direction of these companies and the trust of team execution (especially founders and executive teams). If a strategy is not equal to implementation, money and technology will not implement the strategy. Talent is the most critical factor in determining the success of the strategy.
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