Chapter 19 Where to look for high growth?

There are countless opportunities in the Chinese market, and a large number of consumers' needs have not been met. It stands to reason that Chinese companies should be able to seize the opportunity to achieve high growth, but what is strange is that what we see is either that they are caught in bloody competition of life and death, or that They gradually diversify and lose their focus in the pursuit of new growth, or quickly enter a state of zero-sum competition in new markets. There are usually three explanations for what causes this condition, none of which are accurate.First of all, the reason behind this situation is not that the managers of Chinese companies are not smart enough or do not see the problem, just look at the business media and the various forums they attend to see that they have been discussing how to face such a strategy It is not because they have not taken action, many companies are trying to differentiate their products from their competitors and cultivate their core competitiveness; it is not because of the lack of execution ability, In recent years people seem to mistakenly think that this is the biggest shortcoming of Chinese companies and try to make up for it. In fact, due to the paternalistic tradition of Chinese companies, the long-standing prevalence of command-style management, and the prevalence of strong leaders in companies, Chinese companies pursue established strategies. ability is very powerful.In our opinion, the root cause of this situation is that there is a problem with the fundamental assumption behind the pursuit of growth. Now, we need a new growth logic.

The ultimate goal of an enterprise is to create new growth. Only with sustained profit growth can it surpass its competitors, create value for shareholders, and be an evergreen enterprise.However, the process of seeking the answer to "how to create new growth" has always been based on the keyword competition.Competition has dominated strategic thinking and practice for decades.Although there are a few strategists who advocate that the most successful companies focus on how to creatively use their core competencies to open up new markets, and it is generally accepted to pay more attention to customer needs, the usual strategic thinking is still in the enterprise. Promote best practices, establish a competitive advantage over competitors in existing markets, classify industries as attractive and unattractive, and then try to enter attractive industries.

As effective as it was once, competition-based strategy now seems to be leading companies into the trap described by the metaphor of the car sinking into the mud: the harder you press the gas pedal, the deeper the car sinks.In terms of creating growth, especially high growth, the idea of ​​​​competing with competitors has begun to fail.And the future may be based on such viewpoints that have gradually emerged. Their core is to stand from the perspective of customers and increase the value obtained by customers through value innovation, so as to create new markets and new growth, rather than focusing on defeating customers. competitors.

Intel is a model of continuous growth, but when reviewing its transformation experience, we found that the inspiration it has sought for continuous growth for decades should not be limited to those ideas based on competition, such as core technological advantages, continuous leadership over Competitors improve chip performance and work with Microsoft to establish strong industry standards to keep rivals out. From a new perspective, we found that Intel may bring three inspirations with a gradual relationship: First, think out of the box. In the early 1990s, Intel spent a lot of money to promote "Intel Inside" As a starting point it allows end customers to understand the value of Intel.Second, adopt a completely different way of thinking (think differently), from a technology company thinking to a consumer product company thinking. Intel only realized it for the first time after the Pentium chip floating-point operation error crisis in 1994 and the loss of 500 million US dollars in 6 weeks. Branding has changed the nature of companies.While it didn't restructure itself around consumers at this point, it was more focused on customers' needs than trying to bring new products to market.Finally, think from the standpoint of consumers (thinkbigger). Since the launch of the successful Centrino chip (Centrino) in 2003 to bring "mobile life" to consumers, Intel's product development has been externally driven for the first time. rather than technological progress.The scope of Intel's thinking is no longer the small box of computer products, but thinking in the big picture of consumers.

As the Intel story demonstrates, the logic of growth has shifted.W. Chan Kim, a professor at Insead Business School in Europe, believes that the way to seek high growth is no longer "maintaining a leading position in the competition, but trying to make competitors irrelevant".That is to say, it is a leap to turn the attention from the supply side of the market to the demand side, and from paying attention to and surpassing what competitors do to providing value to customers. This is a fundamental change in the strategic thinking of enterprises: from the perspective of competition, the industry structure is given and unchanged, and companies are forced to compete with each other; from the perspective of value innovation, market boundaries and industrial structures are not given. What has changed can be rebuilt by the actions and beliefs of individual enterprises (Jin Changwei).In the latter's view, market boundaries and industrial structure only exist in the minds of managers, and more needs have always existed. What companies need to do is to discover these needs by rebuilding the value they provide to customers.

Jin Changwei specifically compares the concepts of reorganization and reconstruction.Reorganization is to recombine existing technologies or production methods, to seek innovative solutions to existing problems, and the foothold is in the enterprise; reconstruction is to redefine the buyer value elements given to customers, to redefine problems, foothold and Customers are consistent.For example, in the face of the decline of the global circus performance industry and the competition of film and television, Cirque du Soleil in Canada has achieved great success.The reason for its success is not to provide a better circus by reorganizing the technology and knowledge of circus performance, but because it restructures the buyer value elements to create a new form of entertainment, which has the appeal of circus and theater at the same time, so as to attract those Adult and corporate customers who visit the theater, opera and ballet.

The following story may illustrate why companies need to switch perspectives.Stanford University professor Robert Berkman once dropped a pen on the floor during a lecture, and when he stooped to pick it up, he murmured, "I hate gravity," and when he went to the blackboard to continue his lecture, he again Say, "But you know what? Gravity doesn't care about that!" The consumer's value curve is gravity in the business world, forcing businesses to change over and over again to keep growing and attracting many to the inevitable fall to the ground.But we all know that we exert our power most effectively when we stand in the position of gravity.

However, it should be noted that the consumer value curve mentioned here cannot be obtained from market research on consumers.Market research is often misused and mistrusted.Most of the time consumers don't know what they want, when you ask them, their thinking is often "give me more or less", they are limited by the original product, they will only Ask for more of the value you've already provided.In fact, if market research was really that effective, big corporations should never lose because they would be able to pay more money to hire the best market research agencies to conduct larger surveys.The famous Harvard professor Christensen who proposed disruptive technologies once pointed out that one of the important reasons for the failure of large companies is to cater too much to the needs of the best customers.Therefore, enterprises should stand from the perspective of consumers, observe and think about the real needs of consumers, and provide the value they really need, but don't listen to them too much.

The advantage of the new strategic thinking is that by recombining the value obtained by customers (that is, buyer value), it can enable enterprises to simultaneously realize what Michael Porter called two opposing strategies: low-cost strategy and differentiation strategy (that is, differentiation strategy).Under competitive thinking, differentiating from competitors often means providing more features, more luxury, and higher quality (sometimes far beyond what customers want, such as Intel's chip speed), which means higher costs .Focusing on delivering better performance for the value customers want and cutting out other unnecessary features can achieve both low cost and differentiation.

The four-step action framework designed by Jinchang to rebuild the value obtained by customers starts with elimination, which are respectively: elimination-reduction-increase-creation.He proposed that for the value elements obtained by customers, enterprises should ask the following four questions: What elements are taken for granted by the industry that need to be raised?Which elements should be reduced below industry standards?Which elements should be increased above industry standards?What elements need to be created that have never existed in the industry? So, how to find new growth by making competitors irrelevant through this new growth logic from the perspective of customers?We found that there are four ways as follows:

1. Find out what the real needs of customers are.Strengthen what they need and weaken what they don't. 2. Discover the real purpose of customers to purchase products and services.Meet their purpose, not superficial needs. 3. Decide who the buying decision makers you want to influence are.For many products, there are multiple links in the customer chain. For example, there are computer manufacturers and final consumers in the buyer chain of Intel chips. Intel's strategy is to change from influencing computer manufacturers to affecting final consumers. 4. Discover "non-customers".For any product or service, there are always far fewer customers than non-customers, and if you can attract some non-customers, you will be able to open up a whole new market. To discover a high-growth market, the first thing is to discover the real needs of customers. What is recognized by the industry and must be provided to customers is not necessarily what they need. For some strategic questions, every industry has a natural answer, "what is the customer's demand" is one of these questions.For example, when people buy a car, they want a means of transportation, when they stay in a hotel, they want a good accommodation environment, when they buy a computer, they want a faster chip speed, and so on.However, the real needs of customers may change as the environment changes.Sometimes, the entire industry agrees that the features customers want are not what they really want.If an enterprise can discover the real needs of customers, it may immediately open up new market space, and even expand the market exponentially. In the development history of the automobile industry for more than 100 years, the successful players in each round have completely changed the industry landscape by relying on the rediscovered changes in consumer demand.Before Ford, cars were a luxury item that could be owned by a few wealthy people, with high prices and unstable performance. Automakers customized products according to specific requirements of customers.Ford launched the Model T car, which was called "the car of the masses made of the best materials", which emphasized function, were all black, and had a single model.Ford succeeded by changing the underlying logic of the industry and building cars for the masses, rather than continuing to satisfy what the industry at the time thought consumers wanted from cars as a luxury.Almost two decades later, GM's Sloan found once again that customer needs were changing, and that the masses no longer wanted the functionality of a car—what Ford called "a wagon without a horse"—they wanted more from the car. Emotional needs arise.Therefore, Sloan's strategy is: GM produces "a car for every purse and every purpose", launching car models for different consumer groups, and launching new colors and styles every year.The consumer market for cars has been greatly expanded, for example, people began to change cars more frequently.In the 1970s, Japanese automakers discovered a new demand. Although consumers were still buying cars, American automakers’ implicit logic of “bigger is better” conflicted with soaring oil prices. The Japanese relied on producing small cars. , Energy-saving cars won the market. Of course, looking at the auto industry from such a long-term perspective can help us understand the changes in demand and how the auto industry responds at a macro level, but it is difficult to have reference significance at the operational level.The case of Accor Hotel Group creating a very successful economy hotel chain Formule 1 by defining customer needs can tell us how to discover and meet the real needs of customers. Before Accor launched the economical hotel chain Formule 1 in 1985, consumers in this market had two choices: one was to choose to live in non-star and one-star hotels with an average price of 60-80 francs a night, and the other was to spend 200 francs a night. Francs live in two-star hotels, and the accommodation environment of the latter is better than that of the former.That is, consumers can either pay more for a good night's sleep, or pay less for poor beds and noise.Accor has found that what its customers really want — a good night's sleep for a small price — cannot be met by either of these categories of hotels. Accor wants to meet the real needs of consumers, so it analyzes what the hotel industry provides for consumers.According to Professor Jin Changwei’s analysis, the hotel provides food and beverage facilities, architectural aesthetics, lobby, room size, convenience of front desk service, room furniture and convenience facilities, bed quality, hygiene, room quietness, etc., which are recognized as necessary by the hotel industry. prepared elements.According to the usual practice, no matter how small a hotel is, it must have these elements, so what a one-star hotel and a two-star hotel provide are basically similar, including a lobby, restaurant, gym, etc., but all the quality is worse than that of a two-star hotel Some, so the overall price can be cheaper compared with it. But which of these factors do consumers really value?Accor has found that what consumers really want are bed quality, cleanliness, quietness and cheap prices.Therefore, Formule1 has no lobby, restaurant, etc., and the rooms are much smaller. These practices can greatly reduce the cost of the hotel.On the other hand, the comfort of the bed, the cleanliness of the room and the quietness are much higher than those of two-star hotels, which meet the real needs of customers.In the end, the changes above make it only slightly more expensive than a 1-star hotel.Accor Formule1 has changed the structure of the value provided by the hotel industry to consumers and successfully created a new market. Discovering the real needs of customers, matching the value that enterprises provide to customers with the value they need, eliminating and reducing the performance that customers cannot get value from, can create brand new market opportunities. Businesses can find high-growth markets by discovering what consumers are really buying for.In this case, the company will find that in the customer's value system, its real opponent is not other people in the industry, but may be someone you have never thought of. The strategic question here is, what are our customers really buying our products and services for?In other words, who are our competitors?The answers to these questions are also often taken for granted, few people ask them, and few people answer them completely differently than others in the industry. For example, it seems that people go to the movie theater to go to the movies, but it is more accurate to say that people go to the movie theater to go out and have fun.In this way, its competitors are no longer other movie theaters, but KTVs, cafes next to their homes, or even shopping malls. Many people really use shopping malls as a way to go out for entertainment and leisure.This small example shows that your real competitors are not your peers. Still taking movie theaters as an example, in the general environment where the film industry market has less and less share in the entire leisure and entertainment market, even if the projection effect and the comfort of the movie hall are better than other movie theaters, there are more halls, and the price is lower than others, Serve better beverages, you work harder than your competitors, and your growth prospects and competitive position are not much better than your competitors.So is this market a market that can only earn declining industry average profits? In fact, by recognizing that the competition is not other movie theaters, the business can grow by serving the real purpose of consumers.There are ready-made examples in the Belgian market in Europe. In 1998, Kinepolis, the world's first super-large cinema, was built in Brussels. It won 50% of the market share in the first year and expanded 40% of the new market space.Its success is due to the creation of a brand-new leisure and entertainment experience: the size of an ordinary movie screen is 7×5 meters, while its screen is as large as 29×10 meters; super-large seats, large ground slopes and row-to-row The large seat interval ensures that everyone's sight will not be blocked; 25 movie halls are showing at the same time.what's the result?Instead of going to the movies, Belgians say "go to kinepolis in the evening and have a good time".Of course, Kinepolis' cost structure also makes it more profitable, but the most fundamental reason for its success is that it redefines its competitors - other leisure and entertainment.There are many examples of this in business history.For example, Southwest Airlines, perhaps the most successful airline to date, defines its competition not as other airlines but as driving travel. There is another good example of discovering the real purpose of customers buying products.A fast food chain tried to increase the sales and profits of milkshakes. It first tried to improve the product characteristics of milkshakes: such as making milkshakes thicker, adding new flavors, lowering prices, and adding fruits, but none of them had significant effects.So a new group of researchers joined in to study why customers buy milkshakes. The researchers got an unexpected answer to a question that seemed to have an obvious answer: First, they found that almost half of all milkshakes were sold early in the morning, and that milkshakes were the only purchases made by those morning customers. Things, they usually buy and go.Talking to these customers revealed that these people bought milkshakes for a unique purpose. They bought milkshakes to spice up the tedious and long drive to work.In fact, in the morning, this restaurant's milkshake competitors are boring, bananas, instant breakfast drinks, coffee, and more.But milkshakes are the best of all these options, because other things can't be eaten conveniently while driving, and milkshakes can be eaten with one hand, without spilling, and finished with a straw A smoothie takes 20 minutes, enough to get through a tedious commute to work.Only after understanding the true purpose of consumers can the restaurant take steps to further increase sales of morning smoothies or create other foods that serve this unique purpose. At other times, customers buy the shake for other purposes, when its attributes that would have satisfied the morning customer now become a hindrance.At other times, parents will ask for an extra milkshake for their child after ordering the main meal. Their purpose is to show that they are a caring parent and meet the child's request, and not say "no" to the child all day long. ".So the milkshake's competition at this point is ice cream and anything else promised to buy the kid.Shakes don't do the job very well though, when the parents are all done in no time and the kids are still sucking the shake, it takes a long time to finish it, so the parents get impatient and eat a lot of shakes Half were thrown away.To better serve this purpose, the restaurant might choose to sell a special kids' milkshake. The BlackBerry is the hottest product in handheld mobile electronics, making it easy to check and check e-mail in lines, in conference rooms and in cars.To continue improving a product, ask two questions: What is its purpose?Who are its competitors?The questions are easy to answer at first glance: the answer to the first question is email, and the answer to the second question is handheld computers such as Palms, iPaqs, and increasingly powerful smartphones.But maybe you can look at it from another angle and redefine the purpose and competitors from the perspective of customers. The purpose of customers is to seize a small piece of time to do something.What would people be doing if they weren't using BlackBerry?Maybe pick up the phone, read the newspaper, take notes, or just sit in a conference room for a few minutes. These are the real competitors of BlackBerry in the eyes of consumers. The purpose of customers buying products and your competitors are not clear at a glance. Discovering the real purpose of customers and redefining competitors can also create a new market for enterprises. Customers are also composed of multiple links or groups. Generally speaking, each industry has regarded one of these groups as a purchase decision maker, such as doctors in the pharmaceutical industry and computer manufacturers in the chip industry.But by re-determining who the buying decision makers you want to influence are, businesses can outperform the competition. After you clarify the needs of customers, the real purpose of customers, and who your competitors are, you can also change the value chain of the entire industry by deciding who the purchasing decision makers you want to influence are.People often think of a customer as a customer and treat it as a single entity.But just as product production is composed of multiple suppliers and multiple links, customers can also be subdivided into multiple links or groups, such as wholesalers, retailers, individual consumers, and so on.In many cases, you do not sell products to customers, but to a certain link in the customer group. You have to decide who is the purchase decision maker you want to influence. For example, the customers of Intel chips are composed of at least two links, computer manufacturers and final computer buyers.Before Intel promoted "IntelInside", Intel sold chips to computer manufacturers, and what it had to do was to persuade the purchasers of computer manufacturers to adopt Intel chips. At this time, it identified the purchase decision makers as computer manufacturers.But then, it became a situation where the consumer went to buy a computer and said, "I'm going to buy a computer with an Intel chip." By shifting the purchasing decision makers to be influenced from the computer manufacturer to the end consumer, Intel really took control of the acquisition of the computer. The possibility of the greatest value in the industrial chain. Of course, Intel didn't make the switch easily. IBM once very strongly refused to put "Intel Inside" on the computer. Intel forced it to comply by threatening to stop supplying chips and then supporting its competitor Compaq.In the subsequent crisis caused by the floating-point calculation error of the Pentium chip, IBM announced that it would stop selling computers with Pentium as the chip, which further expanded the crisis that had gradually subsided.Also, as Andy Grove says in his autobiography, "Only the Paranoid Survive," one of the two long-term factors that contributed to Intel's $500 million loss in six weeks in this event was its promotion of the "Intel Inside" change. Product image, turning Intel into a consumer brand. Another example is in the pharmaceutical industry, pharmaceutical companies usually take doctors as the main target of the buyer group. This is because, due to their professional identities and positions in the entire industrial chain, they largely determine what kind of drugs patients will buy. .Similar to Intel's situation in the computer industry, there are also pharmaceutical companies that have taken control of the industry by converting purchasing decision makers into end consumers. Danish insulin maker Novo Nordisk also initially focused on doctors, who decide which insulin diabetics buy.Later, it got rid of the competition by turning its attention to patients.When it started to do this, Novo Nordisk immediately found that insulin was given to patients in small vials, which was inconvenient to inject. You had to deal with needles, needles, insulin, etc., and you had to manage the dose yourself.Due to the need to inject several times a day, they have to carry syringes and needles with them, which makes them feel socially different and psychologically unpleasant. In 1985, Novo Nordisk launched the Novo Pen, a new way of injecting like a fountain pen, reducing the hassle for patients.A few years later, it introduced a single-use, prefilled pen.After that, it launched the Innovo insulin meter, which can help patients manage insulin injections in case they miss the injection time.By turning its attention to patients, Novo Nordisk transformed from an insulin manufacturer into a diabetes treatment company and swept the global market. Enterprises can change the industrial value chain by re-determining who is the purchasing decision-maker, but it does not mean that in all cases enterprises should shift to the final consumer as shown in the examples of Intel and Novo Nordisk.For example, when retailers such as Gome and Suning are becoming more and more influential in China's home appliance industry, if an individual manufacturer positions the purchasing decision-maker as a retailer, it may gain a competitive advantage for a certain period of time.For another example, before SAP launched an integrated enterprise application software suite, other companies defined purchase decision makers as functional users such as human resources departments, financial departments, etc., and thus launched separate applications that cater to different end users For software such as HR system and financial system, SAP defines purchase decision makers as enterprise buyers. Its appeal point is that an integrated system can ensure data intercommunication, sharing and collaboration among various systems. SAP thus creates a new enterprise application software business. By asking "Why don't they (non-customers) buy our product?" Businesses may also discover huge new markets. If you have obtained the largest market share and profit, and it seems that you have obtained almost all opportunities in this industry, then, can you only look for opportunities in other industries to obtain high growth in the future?In fact, for any industry, "non-customers" are a much larger group than existing customers. If you change your perspective and discover non-customers, you can double the size and profit of the entire market.Similarly, here is a strategic question for businesses to ask themselves: Why aren't they (non-customers) buying our products? Christensen, the creator of disruptive technology, refers to this situation by "non-consumption", which means that consumers have some kind of need, but there has not been a good solution in the past.Therefore, to find non-customers actually means competing with non-consumers, and your competitor is non-consumers.Find out why they don't use it, and then remove these barriers, or as time evolves, it has become possible to meet these needs technically, and you can open up new high-growth markets by being the first to enter. Sony has successfully chosen to compete with non-consumer to open up new markets many times in its history.For example, when the transistor first appeared, it was worthless in the mainstream market.In 1955, Sony launched the world's first pocket transistor radio. Its small size, durability, and low power consumption reflect the characteristics of transistors. Poor, low volume, easily disturbed.Rather than marketing the product as a replacement for tabletop radios, Sony targeted teenagers.They couldn't afford a tabletop radio, and while the pocket radio wasn't as good as it could be, it at least did what they wanted: rock 'n' roll out of their parents' ear.Occupying these markets will not have much impact on the mainstream market at first, but soon with the improvement of technology, when the transistor can be compared with the desktop radio, Sony will attract all the customers in the original mainstream market at once.In a product that has become a cultural phenomenon, the Walkman, Sony is also appealing to non-consumers who want to listen to music on the go. In the US market, wine is a stable market, and it is no big surprise that all wineries compete on such things as grape quality, uniqueness, winemaking process, etc.But one Australian winery, Casella Wines, found non-customers.It found that most adult U.S. consumers view wine as an overly complicated drink, esoteric about vintages, flavors, wineries, and all that, and in short, intimidating stuff.These characteristics are the result of wine's long history as a product in a market of educated, well-paid professionals, and it's what incumbent wineries compete with and try to outdo.However, the hundreds of wines with only nuanced differences on the wine shelf alone are enough to scare off most people and turn them into "non-customers".Casella Wines therefore created a wine called "Yellow Tail", but it abandoned the elite image and complexity of wine, and positioned itself as a mass consumer market like the beer market, thereby surpassing the traditional wine market and attracting a wide range of wines. consumer groups. Canon also successfully entered the copier market by attracting non-customers.Canon's desktop copiers make it easy for people to make copies in the office without having to go to the company's high-speed copy center for a technician to complete the copy.It sneaked into the copier market dominated by Xerox.Later, due to the convenience of copying, people copied more and more materials, and the market grew accordingly. In general, for companies seeking high growth, what they can do is to stand on the customer's standpoint and ask the following four questions: What are the real needs of customers?What is the real purpose of customers buying products and services (that is, who are the competitors)?Who is the real product purchase decision maker?Why don't they (non-customers) buy our products? (Note: The case materials discussed in this article are mainly derived from "Blue Ocean Strategy: How Enterprises Start and Sustain Profitable Growth" by Jin Changwei and Mauborgne, and their paper "Value Innovation: The Strategic Logic of High Growth," Christensen's Dilemma and the Way Out: How Firms Create Disruptive Growth Strategies," The Innovator's Dilemma, and Only the Paranoid Survive by Andy Grove , "The Promise of Excellence" written by Donald Su. Jin Changwei put forward the viewpoint of value innovation, and believed that the strategic thinking based on competition should be shifted to the strategic thinking based on value innovation. He named the strategy of discovering new markets as "blue ocean" Strategy", which corresponds to the "Red Ocean Strategy" of competition in existing markets. Christensen put forward the viewpoint of disruptive technology. He believes that enterprises can create high growth through two ways: from low-end disruption and new market disruption. )