How can we make our business grow?
Specially set up a [Reading] section for reading, screening some books worth reading, and providing some summaries. I hope that you have a book on your hand to let the movement of reading continue.
A large amount of data and cases reveals the two majorultimate fate of the enterprise: no matter how large the company is, its “life” has an upper limit; The slower the growth rate.
The objective existence of these two conclusions brings a new problem to the operators of the enterprise: How can we make the enterprise long-term? In this chapter, we focus on solving this problem and give a methodology for longevity.
“Ignorance” market, the final winner
In the book Creative Destruction, Foster divides growth into two categories of different natures – enterprise-level growth and market-level growth. Through research, he found that 98% of the so-called “green” companies that are regarded as the pillars of economic growth will be left behind by the market. The long-term overall growth of the market always exceeds these enterprise-level growth and becomes the last. The winner.
Therefore, Foster throws up a very interesting question: “Is the ‘ignorance’ capital market more intelligent than the business managers trained by these famous business schools?” Why the market Will the overall growth rate be higher than the individual? Even higher than the best individuals?
Where does the market-level growth exceed enterprise-level growth? Adam Smith, the father of Western economics, gave a far-reaching answer to his later generations, the invisible hand, in his masterpiece The Wealth of Nations. In other words, the market is actually “ignorant” and no one deliberately controls it.
The reason for “market-level growth” is that the “invisible hand” is at work. The secret of market-level growth is to use innovative companies to destroy old companies. The effective capital market will mercilessly eliminate all the old and outdated. It is the discontinuity between the old and new companies that has made the overall success of the market.
Similarly, through a large amount of data research and theoretical analysis, Foster also reached a similar conclusion: “The reason why the market growth rate exceeds the growth rate of individual enterprises lies in the market’s destructive thinking based on discontinuity, and enterprises Protective thinking based on continuity.” MarketTwo completely different underlying mindsets from the enterprise bring two distinct growth patterns.
On this basis, Foster continued to extend: “The cornerstone of the enterprise is continuity, the focus is on management and continuity; the cornerstone of the market is non-continuous, and the focus is on innovation and destruction… Capital The market has already reflected the market’s index, which can stimulate the creation of new companies and allow them to operate effectively. But once the company loses its ability to create performance, the capital market quickly and unrelentingly eliminates it. When those survive When the companies themselves have lost their ability to reach the level of compensation that investors expect, the capital market will be able to eliminate these poorly performing companies much faster than those with outstanding performance.”
The market has a typical destructive thinking. When the leading enterprise A in a certain industry develops rapidly, the resources, talents, consumers and other resources in the whole market will be tilted to a large extent; once there is a B company with higher efficiency and significantly higher development momentum than A company, the market will be There will be “discontinuity” changes, and funds, talents, consumers and other resources in the market will gather with B companies by “voting with their feet”.
Market’s “destructive” thinking
When the market selects the B company by “voting with the feet”, the relatively old A company will be eliminated without mercy by the market due to the large and rapid loss of available resources. Here, the market has only done one thing – destroying the original leading companies.
“Clever” company, painting the ground as a prison
We look at the enterprise again. The enterprise is made up of people and inevitably has the weakness of human nature. The founders of all companies want their businesses to be sustainable, so in the face of discontinuity, companies can’t eliminate themselves like the market. In order to grow up in the industry, companies will choose to protect themselves and let the company go forward.
Unlike the “ignorance” market, companies tend to value emotional factors more and have natural fears about unknown risks. Especially in the face of new and old industry disputes within the enterprise, when the main business conflicts with the emerging business, most enterprises will choose to protect the old main business and give up the emerging business. This is the “protective” thinking of the enterprise. .
Corporate “protective thinking”
Different choices are bound to bring different growth results. Under the influence of the open “destructive thinking”, when the market structure of new and old enterprises conflicts, the “ignorant” market will not hesitate to eliminate the old enterprises, and it is easier to show the “open growth” situation; In the face of new and old business conflicts, “smart” companies tend to choose to protect more old businesses with more emotions and abandon emerging businesses with unknown risks. This is a result of a “closed” growth. This kind of “closed growth” is called “big brother eating the younger brother effect.”
In 1973, Motorola invented the world’s first wireless mobile phone, and since then, in the entire analog communications era, it is almost the world’s only mobile phone manufacturer and top wireless device provider. In the era of analog phones, Motorola has a market share of nearly 100%.
The era of analog mobile phones is Motorola’s “first curve”. However, behind the strong growth curve, it often indicates that the “limit point” is coming, but the management of Motorola at that time is obviously undetectable. In fact, as early as Motorola developed the analog communication system, it has been learned that digital communication will be the future trend.
In contrast to the early deployment of digital communications by mobile phone manufacturers such as Nokia, Motorola has the absolute advantage of the market, but still focuses on the “big brother” – the replacement of analog phones. Compared with the “big brother” of Bingqiang Ma Zhuang, the emerging “digital mobile phone” is just a weak “little brother”. Although it represents the future, it has not received enough attention within Motorola. Because if resources are put into “digital mobile phones”, it means that all the original base stations will be replaced, which will seriously affect the sales of analog mobile phones. Because of the inherent “protective thinking” of the enterprise, only the “little brother” can make sacrifices.
It is this kind of “big brother eating the younger brother effect” inside the company that allows Motorola to hand over the opportunity to the later digital mobile phone leader Nokia.