"What not to do" is just as important as "what to do".textPresident of the China Association of Listed Companies and President of the China Enterprise Reform and Development Research Association.
Song Zhiping
** President's Reading Club
Header diagram ** in the attempt library
Whether an enterprise can develop greatly often does not depend on how it does, but on what it does and does not do. Strategy is a matter of choice and trade-off, and once chosen, it is best within the scope of choice. To be an enterprise, you can't conquer the world, but learn to divide the world. Strategy is not permanent and can be adjusted according to the actual situation of the enterprise. No matter how well the strategic choice is, the most important thing is to ensure the implementation and implementation of the strategy.
As the saying goes, "Plant melons and get melons, and plant beans and get beans." "If you plant melons, you can't get beans, and if you plant beans, you can't get melons. You have to choose whether to plant melons or beans. In many cases, "what not to do" is just as important as "what to do", and sometimes "what not to do" is even more important than "what to do", because only by letting go of the old things can you make new choices.
But frankly, it's often harder to give up than to get, because it's often hard to let go of something familiar to both individuals and businesses. There are some things that may be of interest to you, but strategy development cannot be based on interest and experience alone. That's why it's so important to know how to give up.
Many years ago, I went to visit Mr. Bai Fa of Saint-Gobain in France, who has been the chairman of Saint-Gobain for 20 years. I asked him a question: "What do you think is the most important contribution over the years?"He thought for a moment and replied that he bought 700 companies and sold 700 companies, just kept buying and giving up. Similarly, more than ten years ago, many people only saw the rapid expansion of China National Building Materials Group, but they did not know that while reorganizing thousands of enterprises, we also withdrew from hundreds of enterprises. We have made trade-offs all the way to where we are today.
In the process of exiting, it may seem like a loss at the time, but in the overall and long-term view, there will be a greater loss if you don't exit. CNBM has an asset management company that deals with exited assets, and the goal of this company is to minimize losses. For the assessment of the management team of asset management companies, the initial stage is not to look at their profit indicators, but to reduce the amount of losses as the standard.
Not only are difficult enterprises or enterprises with no hope of operating to withdraw, but some enterprises that seem to be doing well for the time being, but are not optimistic for a long time, can also choose to sell. Saint-Gobain had a fiberglass factory in the United States, which was doing well, but it was sold to Owens Corning because they foresaw fierce competition in the future.
So, what is the basis for the trade-off?My view is that if we can have a fundamental advantage in the competition, then develop it to the maximum and make every effort to achieve the highest level of labor productivity and have the greatest competitiveness;If you don't have a fundamental advantage, don't get involved, and even if you do, you should quit quickly, and you should avoid it as much as possible.
For example, in the field of ordinary building materials such as ceramic tiles, wallpaper, building hardware, sanitary ware, etc., China National Building Materials Group has no outstanding competitive advantage compared with private enterprises, so we decisively and completely withdrew. Enterprises are always moving forward in change, adding and subtracting, and maintaining dynamic balance in order to achieve the optimal allocation of resources. The process of doing business is actually a process of continuous trade-offs.
Since its founding in 1802, the United States Military Academy at West Point has had one subject that has been a staple in the curriculum: reading maps. As far as enterprises are concerned, the optimization of the battlefield environment and the opening up of new battlefields are inseparable from the map.
Personally, I also like to look at maps, and a lot of decisions are made in front of the map. In my opinion, strategy is to map the enterprise, not only to think systematically and comprehensively, to know oneself and the other, to outline the panorama of enterprise development, but also to set boundaries for the goals to be achieved, that is, to know the way to make trade-offs. According to Michael Porter, the essence of strategy is to choose, weigh and choose from the right place. To do business, we should also do something, do something, after selecting the territory, we will concentrate the superior forces, and then go all out, which is the key to the success of the enterprise.
More than 20 years ago, when Fuyao Group was a conglomerate with department stores, gas stations, construction, glass and other businesses, Cao Dewang wanted to go public, and the consulting firm told him that there were no comparable companies in the capital market for so many businesses that could not be valued. Cao Dewang then made up his mind, sold the department store, gas station and construction business, and concentrated on making automotive glass. At present, Fuyao's automotive glass has a global market share of about 30% and a Chinese market share of about 60%, making Fuyao Glass an excellent listed company.
Enterprise competition needs to grasp the commanding heights strategically, that is, the place where soldiers must fight in the "Art of War". The commanding heights of the building materials industry is based on the equipment manufacturing based on research and development, any revolution in building materials depends on the innovation of complete sets of equipment, and most of the technology is condensed in the equipment industry. In the pharmaceutical industry, large pharmaceutical manufacturers are light industrial equipment, so the commanding heights of pharmaceutical companies are not equipment, but R&D and distribution networks.
In 2009, I went to Sinopharm Group to become the chairman, when the company only had a sales revenue of more than 30 billion yuan, and the board of directors proposed the strategy of integrating the pharmaceutical distribution business, relying on the terminal to drive the upstream industry, and integrating and developing the pharmaceutical manufacturing and pharmaceutical R&D business. Subsequently, Sinopharm integrated its pharmaceutical distribution network covering 290 prefecture-level cities through joint restructuring, and also developed biopharmaceutical and R&D businesses. As a result of firmly occupying the commanding heights, Sinopharm Group eventually developed into a Fortune Global 500 company integrating science, industry and trade.
General Patton famously said, "Strategy is to occupy a place." I think this sentence has two meanings, one is to occupy what must be occupied, and the other is not necessarily to occupy all places. Strategy is related to the overall situation, and enterprises cannot blindly open up territory, but must make good trade-offs and outline their own territory;It is also necessary to occupy the commanding heights, occupy the places that must be occupied, and firmly hold the right to speak in the territory, and strive to do the best in this territory.
Today's market competition is becoming more and more fierce, the resources and capabilities of any enterprise are limited, only according to the characteristics of the industry and its own advantages, rationally advance and retreat, the grasp of success will be greater. Therefore, as an enterprise, we must not think about "beating the world", but learn to "divide the world".
When China National Building Materials made cement, it was not in all regional markets for layout, but used the "three-point world" competitive strategy. To do business, we should start from the ultimate benefit and value, rationally think about where it is more profitable, where it has more development prospects, and where others can do it.
Why "divide the world into three parts"?This is determined by the "short-legged" characteristics of cement products. The economic and reasonable transportation radius of cement is limited, about 200 kilometers of road transportation and about 500 kilometers of water transportation, so no matter how strong the joint restructuring is, it cannot make a single company dominate the world. Scattered distribution or linear layout is not feasible, can only be distributed in a certain geographical area, according to the regional layout, in the region to form a certain market discourse. In accordance with the principle of "three parts of the world", CNBM has implemented the "big cement" regionalization strategy, promoted joint reorganization, and built dozens of core profit zones with provincial and prefecture-level cities as the market.
In fact, to do business should also have the concept of territory, such as China building materials integration cement is the choice of Zhejiang, Shandong, Henan, and several provinces in the southwest, these places at that time "no leader", no industry leaders, are "one family" medium-sized enterprises, easy to reorganize;For example, Anhui and Guangdong, which are dominated by conch, and Beijing-Tianjin-Hebei, which are occupied by Jinyu, we try not to touch them, that is, we often say not to touch other people's cheese easily. To be an enterprise, you can't conquer the world, but learn to divide the world.
In an enterprise, some things need to remain the same, such as values, core principles of doing things, etc., while some need to be changed, some of which need to be fine-tuned, and some of which need to be completely changed.
When I was in the company, I often reminded myself and my subordinates: "The reason why big companies fail is often because they are always obsessed with past successes." "The environment has changed, the situation has changed, the successful experience of the past may not work, we must constantly adapt to the new changes, and negate the negation. These are the things that businesses should consider when developing their strategy. I've had cases in the past where decisions were stopped at the last minute because I got some new information or because the environment had changed, so I had to adjust the decision. Strategic positioning and adjustment is the top priority of the company's work.
Strategic adjustment must be carried out in the heyday of enterprise development. Many times the adjustments we make are forced to be made when the enterprise is going down to the bottom. In fact, for entrepreneurs, they should play the first move, and when the business is having a good time, they should take precautions to make adjustments, rather than waiting for problems to arise and rush to the battle.
In the development process of China National Building Materials and Sinopharm Group, China National Building Materials has been adjusted from new building decoration materials to bulk building materials, and later adjusted to basic building materials, new materials and engineering services, while Sinopharm Group has adjusted from the development of the pharmaceutical industry to the expansion of the pharmaceutical and health industry. Strategy is changing, but at the same time it is relatively stable. The strategy should not be changed overnight, and its adjustment and change should be progressive, with a certain degree of continuity and inheritance in content.
When the internal and external environment of the enterprise has undergone extremely significant changes, we must find ways to adapt to this change in a timely manner, revise or change the original strategy, or even adjust it substantially. When the industry is developing steadily, the company's strategy is how to increase its core competitiveness to gain a competitive advantage in the marketWhen the industry is disrupted, it is important for companies to adjust their strategies to another high-growth track. For example, Nokia, after the failure of its mobile phone business, made a major adjustment to its corporate development strategy, from the mobile phone industry to the communication network infrastructure industry.
Once the strategic goals have been adjusted, companies need to have the courage to change old thinking and implement new strategies. We must grasp the key work and important links under the new strategy, such as brand building, green and intelligent transformation, etc., which are the key to reshaping the corporate strategy.
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