Shell Finding Room CEO Peng Yongdong combined with Shell ’s strategic thinking and practice at the annual meeting of Source Capital 2019, and proposed that the strategy needs to be clear about “our existence, what does this mean for this industry and consumers”, and point A. And the future point B, and to implement long-term measures around these constant value and concept systems, he said that the strategy is to persist in doing difficult and correct things. Focusing on constant values, Shell and Chain Home have built high-quality industrial supplies and quality businesses through scientific management and value building.
Editor’s note: This article is from WeChat public account “ Source Capital ” (ID: sourcecodecapital ), Author source capital.
The following is the full text of this speech:
What is the strategy?
Before answering “What is strategy”, there is a 0.1 question. What value does our existence create for the whole society, or for the industry and consumers?
All strategies return to the root issue—why do you exist? Existence is the core issue. This is the first pre-thinking when we talk about strategy.
The core of the strategy is to answer two key questions
First, we say that the current location is point A, and the place we want to go to is point B. The core question is, where is the current point A and where is the point B we are going?
Second, how do we get from point A to point B? In the process of reaching point B, there will be countless challenges, and countless capabilities need to be built.
Deconstruct point A and point B from different perspectives
The solution to the second problem is to dismantle the structure. The core method is to look at the industry from different perspectives. Take the real estate transaction industry as an example:
The first perspective is the online and offline perspective of dismantling the industry;
The second method of dismantling from the product line is divided into residential and non-residential;
The third demolition method is based on the regional / urban dimension, because all industries are wired and regional attributes;
The fourth type of dismantling method is to dismantle according to the industrial chain. For example, the industrial chain in the residential sector includes intermediary transactions and the aftermarket;
The fifth is to split according to 2C and 2B, that is, whether it is the consumer or the industry;
The sixth method is to dismantle according to the customer’s life cycle.
The key to different dismantling methods is how to look at the present and future directions.
The residential sector is a very low frequency and user transaction cycle is very long. A second-hand house transaction takes more than 10 weeks to complete. In this transaction, the lineContinuously split between online and offline.
For example, looking at points A and B of the shell from the offline perspective:
The core of this industry is brokers and servers. The core of everyone’s strategy is to make a prejudgment, that is, to predict what kind of changes the industry will have in the future? In our own judgment, the efficiency of service providers in this industry will increase twice, which is point A and point B. There will be a gap between points A and B. In order to fill the gap, all resources must be invested and constructed around this main axis.
From an online perspective:
We see that there are currently about 250 million homes in China, but today there are about 50 million MAUs in China’s real estate transaction line. What will happen to this data? The same figure in the United States is 200 million. And with the growth of the industry, there will be a lot of online dividends. The Internetization of this industry is about 3-5 years behind the consumer Internet. This year, an online bonus has appeared. Users will consume a lot of information online to make decisions. This is a very important variable for our industry.
We think there will be an online platform in this industry in the future, where users can get all the information and services related to living. From the MAU perspective, there will be more than 100 million apps, which can carry all the needs about living.
To answer points A and B just mentioned, what is the core goal of finding point B? I think the goal of point B can be mutually reinforcing with the current situation of point A.
Finding the path to point B from the essence of the industry
How can I reach point B? The core is to find the nature of the industry, which is very similar to the theme of source code today.
I think there are several essences in the Industrial Internet:
First, it is the business of high-quality supply side. Everyone is talking about C and B. The core of the service field is demand and supply. In the industrial Internet, it is a high-quality supply-side business. Good and high-quality supply is on your platform.
Second, quality business. All well-done services must have quality. The core of quality is the standard, and behind the standard is the infrastructure.
Third, scientific management. In most enterprises today, the importance of scientific management in organizational growth is seriously underestimated.
Fourth, the business of values. The choice of values in this industry is crucial.
Industrial Internet is an excellent supply-side business
There are only two basic models of supply and demand in the industry.Type: One type of supply and demand are independent and separated; the other type is integrated with supply and demand.
Our core is to merge the two basic supply and demand models into three sets of relationships:
The first group is the supply and demand between buyers and sellers, which is a business model in which supply and demand are separated;
The second is the supply and demand between consumers and servicers, servicers and brokers. This is the supply and demand of services. The value is exchanged for services. This is a business model in which supply and demand are separated.
The third is unique to our industry. There is a supply-demand business model between brokers. Each broker is both a supplier and a demander to another broker. Strong network effect, this model is the true essence of the industry.
For example, after a broker puts his own listing on a sharing platform, others can consume this information and even generate cooperation based on this listing. This is the cooperation network, which is the essence of the industry.
The future of the industry is the professionalization of service providers
We believe that the real core of this industry is the supply of quality service providers. If all the brokers in this industry can double the efficiency, users can enjoy the real price, if not, the industry cannot be reversed. All our resources are devoted to this matter: how to attract high-quality service providers to connect on the platform and how to help them grow? For example, our brokers have to take the exam twice a year. We call it the Confucian University Exam. Each time more than 100,000 people take the exam at the same time. The test results will be used as a very important indicator to measure professionalism. For example, shell points, I think credit is a hard currency in all business worlds in the future, so we will establish a shell point mechanism. Polishing, upgrading, and optimizing high-quality supplies is a very important proposition, and it is worth investing a lot of resources.
Industrial Internet is a quality business
The logic of what we do is: if the platform can do one thing, this thing is good for consumers, but it is difficult for the server, because the server needs to survive, it is necessary to passively improve its capabilities. When the ability of the service is improved and the service is satisfactory to the consumer, it will be positively motivated by the consumer, so it is more willing to do these difficult things, and a positive cycle of incentives will be formed.
The service industry needs to form a positive cycle of quality. Servants are motivated by consumers. At the same time, the ability and performance of the motivated servicers will also enter a positive cycle.
The industrial Internet is very complicated. It has a lot of roles, a long time, and a complicated process. The same set of service processes has no SOP. However, this matter is something that can be built by the vertical industry in the future, such as our real estate dictionary, quality commitment, SOP grooming and system building for the entire industry, and modular services. Many vertical industries can form service APIs, It can be redefined in a digital way.
Take the real estate dictionary as an example. ChinaThere are 250 million houses, each of which requires 400 fields to describe. For example, is there a bay window in the house? How high is the bay window from the ground? There are several toilets, and each toilet has several windows. These 400 fields have a lot of data. Is it difficult to do this? We compiled a dictionary of 250 million houses across China into a real estate dictionary. This is not difficult. However, it takes ten years for the real estate dictionary team to have a sense of accomplishment, and many organizations are driven by KPI goals, and they may not be able to see value through time.
The same goes for quality commitment. When we were doing real listings, we actually encountered a conflict between two value options, Online and Offline. At that time, Chain Home was doing well in Beijing. The core of this industry was that if there were more homes, there would be a competitive advantage, but the core of the Internet was information sharing. Some colleagues believe that it is absolutely impossible to put information online. This industry is the most valuable information on listings. If competitors also know this information, the advantages of our store coverage will be meaningless.
But consumers want it. But what about these two conflicts? I think what you believe is most important when the organization encounters this kind of conflict. We really believe that consumers come first. The most critical basis for judgment is what consumers want. So in 2012 we put all the information online, including the transaction price.
Back to the first question, what does our existence mean to this society, this industry, and consumers? What does it mean? Today’s era really gives the vertical industry a lot of opportunities. At this point in time, it is really possible to build some infrastructure in the industry. Like the real estate dictionary, quality commitment, basic systems, tools, services, etc., all need to be made by this generation. This is the second point I share with you: the Industrial Internet is a quality business.
What are the long-term initiatives around core values?
When you see what the nature of the industry is, it is not a question of how much to invest in it, but to overinvest. The really important things need to be over-invested, and the really unimportant things don’t need to be invested at all.
The idea system of the CEO and founder directly determines where and in which direction you go. Around these core constant values and management systems, we have to think, what are the long-term initiatives? What to do for the next three to five years? What do we need to do for the next 10 years? The core of the strategy is to travel through time, to be a walker of time, to travel to the future to see what it is doing today is the most important.
The Industrial Internet is a student of scientific managementItalian
The way to achieve things, scientific management gives everyone a systematic and organizational ability to ensure that the goals can be reached with certainty. The core of scientific management is to dismantle the target and continue to dismantle from one target. The deeper you look at your industry, the finer the granularity of dismantling.
Here I quote a model, strategy is a positive feedback, management is a negative feedback process. Before the goal is achieved, we need to know the goal and the status quo so that there is a gap between the goal and the Gap What can make up for this Gap, this is negative feedback. Help you achieve your goals through the power of management.
Industrial Internet is a business with values
In a sense, values is a strategy, a strategy chosen in order to achieve a goal. This strategy convinces everyone to do so whenever they encounter conflicts. This is the power of value selection.
First, what about consumers? I think it ’s good for customers. The core is to believe that we are not so powerful ourselves. We must pay attention to customers because the choice of customers directly determines whether we have a future.
Second, what do you think of the server? What is really good for the supply side is to give him the possibility of long-term future development.
Third, what do you think of the team? Every organization needs others. We put special emphasis on the team in the organization. Today, no Idea can be done by one person alone.
Fourth, subordinate relationships. A person’s promotion and career development is the best relationship as long as there is no direct relationship between them and their superiors. We believe that in the future, all Power should be given to consumers more and more, and let consumers decide the entire organization.
Fifth, what is the mission and values of your organization? When you start to do it, the mission is not so big. When you do it, you find yourself quite valuable, and then you start narcissistic. Only by destroying narcissism and discovering your own weakness can you really have a sense of mission.
The mission of the shell is: a dignified servicer, a better life. Our presence can make a big change in China’s living values, help consumers get a good experience, and help service workers in this industry gain dignity. Everything we do is built around this mission.
Do hard and right things
The first question I just talked about is, what is the strategy? My answer is: strategy is to do hard and right things. All the right things in the world are very difficult, but it has no time limit for survival, the easy things are not too difficult, but the easy things are not long, and there is even no future possibility. There are only two criteria for checking the right thing.Quasi:
A good for consumers;
Second, help the service be good to consumers.
Strategy is doing what is difficult and right. Difficult things require a longer-term perspective, and they need to be down to earth.