Business strategy is a never-ending revolution

In today's ups and downs and ever-changing market, today's star companies may fall like meteors tomorrow. Many industries that make bold statements and claim to be century-old brands will disappear in a few years. No trace left, which made us sigh. There are many reasons for this situation, and a common saying is that these companies do not adhere enough to their long-term business strategies, causing changes and deviations, which ultimately lead to failure. Indeed, many companies have failed due to blind changes in business strategies and strategic directions. However, more companies fail not because of insufficient persistence in strategy. The author believes that many companies fail because of excessive persistence in business strategies. . Today, when voices from all sides are advocating that companies should be firm and focused on long-term business strategies, I would like to sound the alarm for those "strategic adherents" who firmly pursue corporate business strategies and must remain unchanged for a long time. They are paranoid about pursuing business strategies. If the strategy remains unchanged for a long time, the enterprise will be brought to a point of no return.

The so-called strategic adherents refer to those companies that cannot adapt to changes in the objective market environment, adjust their business strategies or make foreseeable changes in advance. On the contrary, those companies that can adapt to changes in the market, or even lead the market forward, can not only thrive, but also survive for a long time.

Market changes are like a winding road, and a company is like a car. If the car cannot follow the development of the road and change direction in time, but keeps moving in one direction, it will Slowly stay away from the market. This truth is very simple, but many companies often stay away from the "path", the market, and consumers in the so-called "strategic persistence". Traditional management textbooks tell us that a company's business strategy must remain unchanged for a long time. If it is easily shaken, the strategic significance will be lost. This sentence is true, but if the strategy is ahead of a cliff, should we continue to persist? And in the market, are there still many cliffs shrouded in fog and covered by flowers?

The author believes that , the real business strategy requires flexibility and trade-offs? When an enterprise encounters temporary difficulties, do not give up, do not be disturbed by temptations and hardships, and continue to pursue the established strategy; however, when the objective market environment occurs, it is impossible to do so. When the fundamental change of reversal occurs, even if we are still developing under the guidance of the original business strategy and making huge profits, we must decisively make timely changes in the business strategy, or even launch a complete business revolution.

One of the top priorities of business operations is to eliminate and evolve their products, marketing models, and even business methods according to market changes. Because if you don’t do this, your competitors will do the same. When your competitors do it, the market and consumers will abandon you. On the contrary, not being bound by yesterday's success and continuing to explore and move forward is the way to continue to succeed. During the Spring and Autumn Period, the famous military strategist Sun Tzu once brilliantly summarized how to overcome past successes and experiences. That is, past successful experiences cannot be repeated because your own situation is changing and your competitors are changing. The objective environment is changing. Therefore, copying the successful experience in a specific environment will inevitably lead to failure. Only by constantly seeking change and constantly adapting to or changing the market environment can enterprises win in this dynamic changing process.

Faced with the constant changes in the market, companies' response strategies vary widely. To sum up, they can be roughly divided into four categories. These four choices determine the competitiveness of the company and the long-term destiny of the company. Let’s analyze them one by one below.

1. The market changes, but I remain unchanged

There are some companies in the market, especially companies that have achieved success with a set of business models. Because they have achieved success in the past, I have been immersed in it, thinking that this successful method can be copied and continued, and then summarized into the company's profit model and business culture. As time goes by, although the market environment has changed, if companies follow the changes and innovate their business models or products, they will inevitably damage the original profit model and profitable products. It is difficult for any successful company to escape from the shackles of this idea. If you come out, you will not be willing to take your own life unless it is absolutely necessary, not to mention that the current profit and operating conditions are good. These companies are unwilling to change their business direction and model, are unwilling to innovate their products, and are even less willing to change the current market structure that is very beneficial to them.

But the fact is that once the objective environment is reversed, it cannot be changed by subjective forces. Persistence and confrontation are like sailing against the current. Not only is it futile, but it will eventually be eliminated by the market. At this time, if you do not initiate a business change yourself, you will create opportunities for your competitors.

Baixin Shoes once relied on family cohesion and seizing the opportunity to achieve impressive results of developing more than 100 chain shoe stores across the country in five years, with assets once exceeding 3 billion. They summarized their successful experiences and continued to copy them. However, despite the huge changes in the market environment, they still used the original successful business methods and gradually began to be eliminated by the environment. In addition to following the previous marketing model, Baixin also continues to pursue the previous business philosophy. It believes that the core cohesion of the family can become the core competitiveness of the company. Therefore, a large number of relatives and friends are prioritized to serve as the leaders of key positions in the company.

Family-owned enterprises do have their own advantages. However, when the enterprise develops to a certain scale, without the assistance of scientific management systems, it still adopts the original nepotistic family-style management model, which makes Baixin different from what it is today. The market is getting further and further away. The founder, Li Zhongwen, almost handed over the power of all core and important departments to his relatives and friends, and managed the company with emotion. There was a lack of scientific restraint and checks and balances. As a result, the management was getting kickbacks, internal struggles and bureaucracy. A master of style, but has made no achievements in business management and marketing. The lack of scientific management that keeps pace with the times has made Baixin moribund today, and chain stores are even more difficult to find. The market has changed, and the corporate structure has also undergone major changes, but its business philosophy and marketing management methods still remain in place, and are eventually eliminated by the times.

At the end of the last century, pagers were very popular, almost everyone had one, and the business of paging stations was also very good. Many paging stations had long-term strategic plans to expand their scale and add base stations. However, the glory lasted for a short time, and the situation suddenly changed. The price of mobile phones dropped sharply, and their popularity spread rapidly, which directly threatened the pager market. At this time, paging station companies were divided into two groups: one group maintained the established strategy, and at the same time adopted tactical measures such as lowering service prices and improving service quality, hoping to fight against the mobile phones that were seizing the market and regaining market share; the other group made timely adjustments Strategy, switch to mobile phone manufacturers, service providers, or switch to other industries. As a result, companies holding one view disappeared as pagers withdrew from the stage of history, while companies holding the latter view escaped the catastrophe of industry disappearance and seized the development opportunities of new industries.

2. Market changes, follow the changes

Following companies are divided into two types, one is the passive following company, and the other is the active following company. Most companies in the market fall into the former category. They follow the changes in the market and make adaptive adjustments. Most of these companies are followers in the market. Their eyes can only see the companies and industries around them, and they basically follow closely. The pace of the market, whether it is the technical level, the marketing level, or the strategic level, all adopt the strategy of imitating and following. In this way, although you are not left behind by the market, it is difficult to achieve impressive results in the market by following the trend. The market created a market and obtained the most generous market returns. Then a large number of followers poured in to share the diluted market profits. Naturally, there was more than enough.

Being a company that follows changes is both easy and hard. It is easy because it does not require a lofty strategic vision and the threshold is very low. Everyone can easily adopt such a strategy. But it is difficult. , it is precisely because the threshold is too low and the competition is too fierce that survival is difficult. This kind of business model is relatively low-level. They follow the trend through passive changes rather than starting from strategic considerations. Such companies do not have their own clear strategies at all, or they follow the strategies of successful companies.

A second-tier furniture company where the author once worked adopted this strategy to focus on the appearance of first-tier brands or foreign brands in product design. Without its own design and R&D department, the result is that although R&D expenses are saved, most companies adopt the same method, resulting in serious homogeneity. In the end, the competition is on price, while first-line brands imitate them. Continuously develop new products while engaging in price wars to earn the most profits. This company not only imitates its products, but also imitates its peers in management and marketing. This following strategy has kept the company at an annual sales volume of several million despite operating for nearly ten years.

There is also a type of follow-up company that is an active follower. Although such companies do not have a far-sighted strategic vision, they have never been left behind by the times and the market. The reason why such companies can survive is very important. The good thing is that they are not following the industry, but following the market, consumers, and the times. Because their follow-up strategy is obviously stronger than the passive follow-up companies that follow them, although these companies have not developed breakthroughs, they are still operating steadily, and many of them are industry leaders. A typical representative is Tong Ren Tang Pharmaceutical. Tongrentang was founded in 1699. After more than 300 years of ups and downs, it eventually developed from a small workshop-style pharmacy into a local pharmaceutical leader with assets of over 3 billion. Tongrentang initially gained a foothold because of its complete range of medicines, genuine products at reasonable prices, and the ability to treat children without deception. It has maintained a very high reputation and performance for more than two hundred years. However, in the 20th century, traditional Chinese medicine has become more scientific than Western medicine, which has continued to develop. Western medicine still has considerable limitations. Especially after my country's reform and opening up, Western medicine has had a huge impact on my country's traditional Chinese medicine market. Faced with pressure, Tongrentang did not cling to yesterday's glory, nor did it arbitrarily deny Western medicine. Instead, it absorbs the essence of Western medicine and integrates it into itself, creating many excellent products that are unique in the world. A foreign friend came to Beijing to visit. She told me that part of their trip was to buy some traditional Chinese medicine from Tong Ren Tang for their own use or as gifts for relatives and friends. Tong Ren Tang not only continuously changes and innovates its products, but also keeps pace with the times in terms of marketing methods and management methods. Recently, it has also carried out channel changes and marketing innovations to develop with the times. This has made Tong Ren Tang no matter how the objective environment changes. , has maintained its golden name as a brand of traditional Chinese medicine for three hundred years.

3. Foresee future changes in the market and make changes in advance

This type of enterprise has keen insight and mature strategic thinking. They know how to discover and grasp the upcoming changes in the market. Business opportunities may not necessarily come from the market, and the scale of the enterprise may not be very large, but they can grow and make profits in the market with almost no competitive pressure.

Zhongshan Julong Metal Jewelry Co., Ltd. is a company that produces nail clippers. Its leading brand is "Very Small Device". Like its name, their products are very small devices, but they use This tiny device does a great job. At the beginning, the nail clippers market in my country was very small and complex, and the product quality was generally low. Liang Boqiang, the owner of Very Small Equipment, is sure that the future will be a market pattern in which the fittest will survive, high-quality products will survive, and brand will be king. So he traveled to 146 countries around the world for inspections. After returning to China, I determined that I would not seek to become bigger, but seek to become stronger, take the high-quality route, and create an independent brand. More than ten years ago, this idea was advanced among most small and medium-sized enterprises that relied on OEM for their livelihood. However, it also carried considerable risks, because OEMs had income guarantees, while independent brands did not, and they had to invest in the early stage. A lot of equipment and R&D funding. However, it seems today that "Very Small Device"'s prediction was correct. Most of the companies that were OEMs for other brands back then have disappeared, while Very Small Device is getting stronger and stronger. In today's market environment where a strong company does not necessarily have to be big, and a brand is a money printing machine, it shows its foresight back then. Very Small Equipment has launched two brands: Sheng Yalun and Very Small Equipment. Its products are exported to many foreign countries, ranking among the top three in the world and first in Asia. And became the drafter of my country's nail clipper industry standards. Although the company is not large in scale, it is a veritable hidden champion. It can be seen that strategic vision is not only applicable to aircraft carrier-level enterprises. As long as you see far and accurately, no matter how small an enterprise organization is, you can gain an unrivaled relative advantage.

Li & Fung Trading Group, a long-established Hong Kong company founded in 1906, is not a very large company, but they are also wise men who are ahead of the market. Li & Fung Trading started its trading business a century ago. After entering the new era, it also faced the problem of changing its business model. But the difference is that they did not keep pace with the times, but were one step ahead. They took the lead many years ago to take advantage of the powerful power of the Internet, integrating high-quality and low-cost raw material procurement bases and companies from countries with the cheapest labor around the world. The manufacturing and procurement network expanded from China, India to the Caribbean, the Mediterranean and other places, with more than 1,000 global partners, and later entered the logistics field. Li & Fung can combine and design production content according to customer order requirements.

For example, if a customer needs a product with price priority, then Li & Fung will choose the cheapest manufacturing combination while ensuring quality: looking for manufacturers with the cheapest raw materials and cheap labor who are close to the customer, and using sea transportation etc. to reduce logistics costs. If customers require quality first, then Li & Fung will look for better raw materials and cooperate with better production companies around the world. In short, Li & Fung can always provide customers with tailor-made solutions through its global network. The network's real-time model also greatly reduces inventory costs, thereby greatly improving the market competitiveness of enterprises. At this time, Li & Fung was playing the role of a network integrator. He combined pearls from all over the world into different combinations according to the needs of customers, and strung them into the most professional pearl necklaces. It can be said that Li & Fung has nothing, but it has everything.

It seems today that Li & Fung’s business model has begun to be widely accepted and imitated. However, today Li & Fung is exploring newer areas to foresee tomorrow.

4. Change the future of the market

This type of enterprise must not only have a far-sighted strategic vision, but also must have strong strength and sophisticated marketing methods to support it. Let’s first talk about the rewards for successful companies that adopt this kind of business strategy: they can gain huge profits that no one can compete with in the early stages of market development, and they may always become the dominant player in this market, or even a monopolist.

Take Galanz, an outstanding microwave oven manufacturer in my country, as an example. It does not have cutting-edge technology. In a product and market with no obvious differentiation, Galanz is focusing on production costs and constantly changing the future market. The pattern and rules of the game? When its microwave oven production capacity is 1.6 million units, the ex-factory price is set at the cost price of 800,000 microwave ovens. When the production capacity is 3.3 million units, the ex-factory price is set at the cost price of 160 units. When the production capacity reaches 16 million units, At that time, the ex-factory price was set at the cost price of 8 million units. This way of changing the market means that most microwave oven manufacturers will be eliminated, and it also discourages many potential opponents who plan to enter this industry. Galanz therefore has absolute control and say in the market, and its trends also determine the future direction of the microwave oven market.

In June this year, the American Eastman Kodak Company announced that it would stop producing the 74-year-old Kodachrome color film, its flagship product, this year. For a former dominant player in the film and photography markets, what does the cessation of production of Kodak color film, which symbolizes the Kodak empire, mean? Loss of core products? Loss of competitive advantage? Or the decline of an industrial empire? None, for For Kodak, this scene was something they had expected, and they even personally pushed for the withdrawal of color film from the stage of history. Twenty years ago, with the advancement of science and technology, digital technology gradually entered the lives of ordinary people. As the leader of the film production industry, Kodak decided to create the future market when it could not see clearly. They saw the application of digital imaging technology in the military and aerospace fields, and concluded that in the future market, convenient digital photography can completely replace traditional photography equipment. Therefore, they took the initiative to change before this market trend was formed, and transformed the lucrative traditional photography equipment at that time. Most of the film business was shut down or sold, and it turned to the digital business with unclear trends and limited profits. In 1991, a commercial digital camera was developed. Now it seems that the photography market has indeed entered the digital age as expected. Today, Kodak stopped the production of color film, which means that their plan to eliminate themselves twenty years ago has completely won. The real strong man is always a game between his left foot and his right foot.

As a strong man, success can indeed bring huge benefits. On the contrary, his failure will also bring a devastating blow. The pioneers of the thermal underwear market encountered the misfortune of such a strong player. It created a thermal underwear market with a consumer space of tens of billions. However, after it spent huge sums of money to educate the market, other manufacturers rushed to seize the market cake. At this time, the pioneers of this market Due to depletion of resources and the inability to compete with many energetic opponents, the wedding dress for others was in vain. It is difficult to see this originator in the thermal underwear market today.

This pioneer of the thermal underwear market can be said to have opened up a new path. His forward-looking strategic vision and strength are outstanding. However, the operation of an enterprise depends not only on foreseeing the future. Vision and ideas for exploring the future, but also strong comprehensive capabilities. Lack of strategy, management, marketing, and resources in any aspect may lead to business failure.

The above introduces the different ways in which the four types of enterprises respond to market changes. From this we can see that if enterprises want to survive and develop, their business strategies must be able to flexibly change. If a company wants to avoid being eliminated from the market, it must at least be able to follow the changes in the market and make corresponding adjustments. If it wants to survive better, it must foresee future changes in the market or create future markets. Maybe we can't do it, but at least we have to think about it, think about it, and then work hard to do it. Considering the market environment and the average marketing level of the enterprise, it is not advisable to do one type. You may not have the conditions to do the fourth type. The most realistic approach is to start with the second type in order to survive and move towards the third type. Work hard for development and longevity. But be careful not to stay in the second type of enterprise just because of immediate benefits, because in the future market, it will be increasingly difficult for such enterprises to survive, let alone develop and grow.

When the objective environment undergoes disruptive changes, the business strategy of the enterprise must change. When the enterprise itself undergoes qualitative changes, the business strategy must also change. Change is an iron law that will never change in the rules of the market game. For enterprises, , the innovation and change of business strategy is a never-ending revolution.