Chapter 4 The 20 Biggest Mistakes CEOs Make

Review background: Shenyang Feilong, like all the emerging companies that roared up in the early 1990s, has gone through a difficult road from small to large, gathering sand into towers.In those years full of entrepreneurial passion, Feilong's call made him a model of entrepreneurship in the Northeast at that time.But its founder, Jiang Wei, is an entrepreneur full of poetic temperament.Perhaps it is this so-called poetic temperament that made him the first among Chinese entrepreneurs to face up to his mistakes and speak out loudly to the whole society.Although from a practical point of view, what this kind of courage to face directly is only a page of history.

I still haven’t tried to recall this article "Top 20 Big Mistakes of CEOs" since the birth of Feilong.Feilong's soaring into the sky is due to huge advertising investment. In the early 1990s, the entire health care product market was still in a sluggish stage. Jiang Wei’s large number of high-density advertisements for Yansheng Hubao Liquid undoubtedly hit the market at that time, and the company’s profits also decreased accordingly. section climbed.While so frequently using advertisements to drive sales, Feilong has not improved product quality. While using advertisements to make great strides, it also planted the seeds of failure.The biggest problem is that Feilong's advertising strategy without technology and integrity has opened a Pandora's box of disorderly competition in the Chinese health care product market.

It can be said that Jiang Wei's poetic temperament was a big reason for the failure of Feilong later.After Feilong failed to go public, Jiang Wei discovered the huge management problems of Feilong.Since then, he has continuously implemented a series of measures, including the company entering a rest period, conducting rectification within the company, and publicly publishing "Top 20 Mistakes of the President" in the media, etc. These wrong decisions made at the wrong time led to The final disintegration of the dragon. In July 1996, Jiang Wei published this "20 Big Mistakes" statement on the theme of "President's 20 Big Mistakes". This article published at the time finally led to the hopelessness of Feilong's "take-off".In Jiang Wei's review of his 20 major mistakes, he ignored his biggest mistake, that is, at an inappropriate time, he made some moves that made the situation more difficult to control, which was tantamount to holding a knife around his neck On the contrary, if one misses, the company will be decapitated.

One year after this article was published, Jiang Wei appeared in front of everyone again.This time, he set off another "Viagra" trademark registration battle.However, the final result still ended in failure.Thus, an entrepreneur with poetic romantic feelings was finally defeated by his blind and unrealistic character. 1.The romanticization of decision-making.In an enterprise with many intellectuals, there is nothing wrong with the romanticized corporate culture inherent in intellectuals.However, an enterprise is an economic organization and is in a life-and-death economic competition environment.The fundamental purpose of an enterprise is to obtain profits, and every act of an enterprise must be calculated in terms of specific profits.During the 6 years of business practice, the president has played down the purpose of corporate profits, and made too idealistic and romantic decisions. As a result, most of the cadres of Feilong Group also have serious idealistic and romantic behaviors during the operation of the enterprise, regardless of cost and regardless of cost. Calculate profit.

The purpose of businessmen is to make money. Philosophers, artists, and visionaries cannot exist in enterprises. 2.Ambiguity in decision making.It is one of the business rules not to do what you are not familiar with, but for a period of time, the CEO put too much emphasis on industrial diversification and got involved in many unfamiliar fields; at the same time, there were many things that the CEO was familiar with, and there were no talents familiar with them to implement them. So blind decision-making and fuzzy decision-making happen from time to time.Make decisions based on irrational judgments such as "probably", "estimate", "approximately", and "as if".

3.The impatience of decision-making.The market economy has only a beginning but never an end, and all businessmen must participate in the endless market competition with a calm attitude.In the past 6 years of enterprise development, especially in the critical period of enterprise development, the president is often in a state of impatience, panic and imbalance, causing all cadres to also be in a state of frightened birds.In this top-down mindset, one-sided decisions are made, bad decisions are made, and dangerous decisions are made. The root cause is that if you always think about the overall development and prepare at any time, especially if you have a mature preparation for the upcoming situation, then you will not be chaotic when making decisions.If you are prepared, you will be calm, and if you have foresight, you will not be nervous.

4.There is no long-term talent strategy.The essence of a market economy is the competition of talents, which is an old-fashioned problem.Looking back on the development of Feilong Group, apart from strictly recruiting marketing talents from the society in 1992, Feilong has never seriously designed the talent structure strategically.Random recruiting, recruiting based on favors, and even abnormal recruiting taking into account kinship, family, marriage, etc., occurred, and lasted for three years.As a company that has developed into the top few domestic medical and health products, it is hard for outsiders to imagine that the company does not have a complete talent structure, and there is no complete selection and training of talents; a cutting-edge enterprise in the market economy competition has not realized Marketization of talent management, talent competition, and talent use.The low quality of personnel has caused the enterprise to be in a low-level and low-quality operating state.The talent quality of the enterprise is single, and the knowledge complementary ability is very weak, so it cannot become an organic and rapid development whole.The unreasonable talent structure also leads to the unbalanced development of various departments of the enterprise, such as weak planning, large market, weak quality inspection, large production, weak finance, large marketing, etc. The development is uneven or uncoordinated. , resulting in the situation that the weak talent department hinders, destroys, and stagnates the rapid development of the strong talent department.In the end, it caused the entire company to slow down or even stagnate.

Since there is no long-term talent strategy, there is no idea of ​​talent reserve.When an enterprise enters a new industry or enters a new stage, it suddenly finds that there is no talent reserve, so in the development of the enterprise, it is often in a state of talent shortage, and it often pays a heavy price to catch ducks on the shelves. In short, the mistake of talent strategy is the most influential mistake of the group since its establishment 6 years ago. 5.The talent mechanism is not market-oriented.Feilong Group has two mistakes in the concept of talents: one is that talents do not flow easily, and the other is that it cultivates talents by itself.There are objective reasons for the formation of these two talent views. In order to maintain corporate cohesion, a stable environment for talents is needed, so the mobility of Feilong's talents is very low.

At the same time, because Feilong is a private enterprise and lacks legal protection, the reliability of talents is the first priority. Over time, it has formed its own practice of cultivating talents.However, the recruitment and use of mature talents by important departments, key departments, and urgently needed departments has been neglected for a long time, resulting in the current low quality of personnel and the difficulty of high-quality operation of enterprises. 6.A single talent structure.Due to the characteristics of the profession, since 1993, under the premise of no talent structure design, a large number of professionals in the direction of traditional Chinese medicine have been blindly recruited and placed in all departments and institutions of the company, resulting in a single knowledge structure at the top and middle levels of the company. The unreasonable structure has seriously hindered the development of a large enterprise.

7.Talent selection is poor. In March 1993, a senior leader's mistake caused the director of the marketing center to leave the company, and the marketing center fell into chaos for a while.This incident reflects a common phenomenon in the Feilong Group—weak, handsome and strong generals.Weak commanders can't manage strong generals at all, and strong generals simply don't accept the management of weak commanders. In fact, they can't manage and don't manage, and warlords divide their regimes and occupy the mountains as kings.Branches are actually in a marketing state of their own, making their own decisions, unable to carry out unified marketing management.The fundamental problem that caused this phenomenon is that the internal competition mechanism has not been established, strong generals cannot become strong generals, and weak generals cannot occupy positions. The "iron top chair" is originally a disease of state-owned enterprises, but it has spread in private enterprises such as Feilong Group.

8.Enterprise development lacks foresight.In the process of business operation, we made the mistake of not having a long-term development plan and not improving the company's operating structure in a timely manner. It is very dangerous for an enterprise to have no development plan.With the continuous development of the enterprise, it is necessary to constantly improve the organic management and operation structure of the enterprise leadership, so that the enterprise will always become an organically operating body. This problem has not been solved yet. 9.Enterprise innovation is weak.Innovation is the foundation of enterprise development. An enterprise that has developed for 5 years without innovation will inevitably decline, and a product that has been sold for 3 years without innovation will inevitably die.This is the relentless law.However, in the past 6 years, the president has overemphasized the past glory of the company and has not seriously thought about innovation, resulting in no new ideas in corporate management and market development.In the future, we will complete entrepreneurship and innovation by replacing new forces. 10.The corporate philosophy is incoherent.Looking at the files of Feilong Group in the past three years, the biggest feature is that the president talks a lot, but there is no specific guidance on how to do it.There are only theories but no specific implementation methods, resulting in a situation where theories are incomprehensible and there are no specific methods. It is a waste of time to talk about it. New ideas often appear and there is no coherence.The president himself did not find a coherent concept, which resulted in the company not having a coherent business idea for a long time. 11.Management regulations are not accurate.During the six years of development of Feilong Group, countless rules and disciplines have been formulated, and the rules and regulations are relatively complete.However, most of these regulations do not have strict specific implementation rules, and have not been implemented to specific responsible persons, making it difficult to follow the regulations.To correct this mistake, we need to start now. After the departments of the headquarters and the companies in the market have improved the existing laws and regulations, they need to add two aspects: the detailed rules for the implementation of the laws and regulations and the detailed rules for the implementation of inspections. 12.Slow response to national economic policy. Before 1993, due to the use of ordinary invoices and legal restrictions, the company implemented ex-factory price sales to mobilize the enthusiasm of intermediate wholesalers. New in 1993! After the tax system, the state implements value-added tax to deduct invoices, so that enterprises have the conditions to increase sales.At this time, the president: Instead of making a decisive decision to increase sales and increase the direct supply of enterprises to retailers, he used a reluctant method to adapt to this tax reform.With the implementation of mark-up sales, the company can obtain 16% net profit in the market without increasing the retail price of products, and the operating capital in the market will also increase hugely.If the fare was increased in 1993, 20 million yuan of fare increase funds will be obtained. The fare increase in 1994 will receive 30 million yuan of fare increase funds.On this issue, the president was limited by conservative thinking. As a result, in 1995, when problems such as huge arrears of payment by middlemen, weak retail links, and serious shortage of funds occurred, he was eliminated from the company. 13.Neglect of modern management. In 1993, a certain department of the country visited twice to promote modern automation management procedures; in 1994, another department came to promote modern office management procedures, but both were rejected by the president.The three companies completed modern management at this time, and when the health care product market shrank, they benefited greatly from this, and there was no financial chaos like Feilong Group.This lesson tells us that enterprises must continue to use modern technology to complete the careful management of enterprises.Scientific management should not only be based on scientific thinking, but also based on scientific methods, the foundation of which is technology. 14.The benefit mechanism is not balanced.Because the president has been influenced by the idea of ​​"big pot rice" for a long time, he overemphasized the "co-creation of development" of Feilong Group and did not break the egalitarianism in the distribution system for a long time.In fact, corporate cadres have been using gray or black income to make up for the lack of their own income.In this way, the business concept that the company spent 6 years building was completely destroyed.Everything that inspires people is crushed by the legend of gray income. In 1996, Feilong began to break the balance of interests, but neglected to educate employees on the correct concept of money, which caused some employees to go from one extreme to another, and there was a terrible phenomenon that everything was money.Feilong Group was originally a company gathered by aspiring young people. In the first five years, the group operated under a relatively low distribution system and successfully completed its initial development relying on corporate beliefs.In the development of the new era, a concept should be clarified: We need money, but we need career more. 15.Funds are peppered.Feilong Group has been in a state of scattered use of funds for a long time, and cannot use funds in a planned and large-scale centralized manner.The scattered use of funds has caused serious waste and led to a serious shortage of funds.Controlling funds well is a crucial principle for enterprise development. 16.The same model of market development.After Yansheng Hubao Liquid successfully entered the market, its model was regarded by the president as a universal standard model, and the new product developed in the later stage was mistakenly promoted on a large scale across the country with different products, different performances, and different consumer groups. It is a big mistake to have unique promotion tactics.On this issue, the president made a serious empiric error, overly believing in personal wisdom, failing to cooperate with major advertising companies across the country in a timely manner, and using collective wisdom to complement each other, resulting in no new plans and methods for all new product launches. 17.Inflated market share.In the past 6 years of decision-making, the market share and market sales volume have been overemphasized, resulting in a serious situation of sharp increase in market receivables, confusion of goods, and depreciation of goods.Especially when dealing with the contradiction between the shortage of funds and the total amount of goods in circulation, the catastrophic impact of the total amount of goods in circulation on the market was underestimated, which instead led to a vicious circle of increased receivables and poor payment collection. Therefore, it is necessary to stabilize the relationship between supply and demand for a long time, and would rather reduce the scale of production and sales, but also increase the internal quality of enterprise operations. 18.There is no comprehensive market advancement rhythm.Any product has different cycles in the market. To maintain the eternal vitality of the product in the market lies in the overall advertising planning.Without a comprehensive advertising plan, it is tantamount to declaring that the product is dead at this moment. 19.Carpet bombing of ineffective advertising.The retail terminal of marketing is the most basic point of market attack. Due to the rapid development of the group, the president has neglected to focus on attacking retailers, hospitals, and pharmacies in the past three years, and one-sidedly emphasized the three-dimensional advertising attack in the whole country and in big cities. effect.Due to the long-term existence of this error, a large number of invalid advertisements were caused, the advertising effect was not obvious, the advertising funds were lost, and there was a sharp increase in advertising payables, and the input and output were out of proportion. 20.The idealization of international trade.We are not familiar with the laws of international trade, and it is a serious empiricist error to use domestic successful experience to repeat export in the international market: the sales volume and price in the international market are overestimated, and the resistance to entry into the international market is underestimated. In summary: The foundation of the success of a market economy lies in the correct decision-making and the implementation of the correct decision-making.How to complete the implementation of the right decision?Enterprises need to innovate in the new development stage, thinking methods and working methods must be constantly innovated. We must establish such a concept: the past mistakes of Feilong Group are the precious wealth of the enterprise and the valuable asset for future development.The mistakes of major companies in the society are also valuable assets that we can learn from.The information center and intelligence center should constantly collect the mistakes of the enterprise itself and other enterprises.It is necessary to develop such an atmosphere in the whole group: dare to admit mistakes, dare to analyze mistakes, any behavior to resolve and conceal mistakes is a stupid behavior, and it is an behavior that leads to the failure of the enterprise. We have established a goal. When this goal is not achieved and we fail, we should recognize that this is a mistake and avoid making the same mistake again.People must not try their best to find a few small successes and a few small shining points from the things that have failed, and use this as an excuse to explain our failures and find psychological self-balance. Finally, I will end my review with Mao Zedong's words: Mistakes and setbacks teach us a lesson, make us smarter, and manage our affairs better.