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The Growth Mindset That Separates Big Companies from Small: Business Standardization, Talent Specialization and Management Professionalization

  We do consulting for enterprises, where is the biggest limitation? We do not have the experience of large companies. If we are not careful, what we teach companies is the way and thinking of small companies. Once this way of thinking and way is solidified by customers, they will never grow big.
  This question triggered my thinking: what is the thinking and way of big companies? Now, the Internet, self-media, and management circles are all talking about how small companies should be managed, what should be done for large companies, small companies should focus on mechanisms, and large companies should rely on management… There are many sentences like this, which are conclusive. Also a lot. But as Mr. Ren Zhengfei said, if you want to become a big company, you must think in the way of a big company. How can a small business become a big business if it always plays the same way as a small business? It contains a very key proposition, that is, how can we make it understand the way of a big company when it is small, and not restrict its growth into a big company because of its management style.
Management is the most sustainable driving force for enterprise growth

  I studied past classics and sorted them out, and came to an opinion: Today’s companies generally make three shares of money when making money.
  The first is outlet profits. You must enter a market where demand far exceeds supply. At this time, there are opportunities to make profits. So Lei Jun said that if you stand on the wind, pigs will fly. When a company is on the forefront, it grows quickly and makes money quickly. Most companies that have become large companies have stood on the forefront of the trend at a certain period of time. When we went to Xiaomi for exchanges, Xiaomi’s internal management was in a mess. From entering the door to the conference room, including the arranged dialogue guests, it was basically in a state of disorder. However, Xiaomi has achieved 70 billion yuan in 5 years, which is enough to show that it is successful. This success lies in leveraging the power of the outlet and making profits from the outlet.
  The second is operating profit. In 2005, I went to Hongta as a consultant. At that time, its performance had declined for 10 years, but it was still the leader in the tobacco industry, with the highest profit and very low management efficiency. For example, if you submit a report to a company in the Pearl River Delta in the morning, they will communicate with you in the evening. The situation with Hongta is that if you submit your submission to them on Monday, they will say to discuss it next week. When you press them, they will say that it is urgent and they will pay you anyway. The marketing director informed the meeting and asked everyone to wait in Hongta’s own five-star hotel. When everyone was ready, he called the director, but the director said that the president had something to ask him, and he didn’t have time to leave, so we can talk about it later. Hongta’s management efficiency is so low, but it is very profitable. This shows that the great thing about Chu Shijian back then was that he had a good business layout. The best tobacco leaves in China are produced in two places, one of which is Yunnan. Chu Shijian knows the soil of Yunnan very well, so in the early stage of reform and opening up, he locked in a long-term contract relationship with the local tobacco farmers, and controlled the best tobacco leaves through the “company + farmer” approach. Other tobacco companies need to import tobacco leaves from Yunnan. Hongta’s business layout can obtain key profits, so operating profits cover up the lack of management efficiency.
  The third is to manage profits. Take the automotive industry as an example. Are there any profits to be made in this industry? In fact, it has been very stable. There is a trend in some Chinese markets, and companies like Great Wall Motors have emerged, but the big trend is no longer there. Like Volkswagen, General Motors, and Toyota, their brands are similar and their core technologies are almost the same. It is also difficult to compete for management, so the only way is to compete for management profits. In terms of management, how can I make my bicycle cost lower than yours? The price of a car is the same as yours, but my cost is lower, so I make more money. This is the power of Toyota.
  Among the three pieces of money a company earns, the profit from the outlet can cover up the deficiencies in operation and management; the profit from the business can cover up the deficiencies in management. There are also levels of profit. Huawei’s management ability is strong. When it played with Xiaomi, Xiaomi was very good when it didn’t see Xiaomi’s style of play clearly; Management efficiency, no matter how much you talk about models and Internet thinking, it will all turn into cost, quality, and R&D speed for you. Because every industry has to stabilize in the end, it still has to fight for management, so management is the most lasting driving force for enterprise growth.
The logic of large enterprises: business standardization, talent specialization, and management professionalization

  The way I study large companies, instead of studying the outlets, I always feel that the outlets have an element of luck. Doing business has the logic of fate and the logic of cause and effect. Whether you can catch up with the trend, the logic of fate often plays a greater role, and it is extremely difficult to catch the trend.
  As we all know, artificial intelligence is the most popular trend now. Li Kaifu said in the book “Artificial Intelligence” that as the first batch of engineers engaged in artificial intelligence, they did not catch up with the trend. Why? We all know that the core of artificial intelligence is that machines can understand human language and communicate with people at the language level. The early research idea was engineers + linguists. Linguists study the laws of language, and engineers turn it into code for implementation. down. Every high-tech company invests a lot of money in the research team, but finds that the recognition rate is only 20%-30%, which is basically useless. Later, IBM changed its thinking, because linguists were hired away by others, and no good linguists could be found, what should I do? IBM uses statistical means to model. As soon as you say the voice, you associate the corresponding words and finally build a model. Kai-fu Lee also adopted this model at Microsoft, and the recognition accuracy rate increased to 40%-50% because of insufficient data. Recently, the trend has come, because big data has come, and the Internet has formed big data. For example, the Xunfei input method, every person who uses the Xunfei input method finds a wrongly recognized word, and then corrects it, it will be recorded and form statistical data. As the amount of statistical data increases, the recognition accuracy rate will increase. The higher the level, the more intelligence really comes. The formation of tuyere requires many conditions, which are not something you can prepare for. But the first generation of engineers missed this outlet, and they can only sigh.
  There is also an element of fate in running a business. We cannot understand the logic of fate, we can only study the logic of cause and effect. In the Internet age, what is the way of big business left over from the industrial age? To study causal logic, one must study proven patterns.
  Therefore, I will study the logic of the growth and development of large enterprises, and study what the industrial age has left for management, knowledge, and social civilization, what has changed and what has not, and what is the logic of large enterprises. In the industrial age, large enterprises follow three internal logics: business standardization, talent specialization, and management professionalization.
  First, business standardization.
  This is the experience Ford gave us. Since Ford Motor, there have been big companies, “big market + large-scale distribution + large-scale production”, which is a basic logic of its business. A small market can never be a big company, and no big company is made up of a bunch of small markets. A large market provides conditions for large-scale sales, and another condition for large-scale sales is large-scale production. Because you want to expand sales, the price must meet the requirements of mass consumers. Large-scale production can reduce costs, so that there is room for prices to satisfy mass consumers. This business logic has not been subverted by the Internet. Xiaomi’s product line is so long, and it is still engaged in the ecological chain. In fact, its top-level logic still requires a large number of self-made products and repeated purchases. It will not make those peripheral products by itself.
  From this we can derive an organizational logic – business standardization. There is no scale without standardization, which is a management principle left over from the industrial age. All Ford did was standardize the business. He turned the manufacture of a car into more than 2,000 tasks, among which dozens of tasks can be done with one leg, and several can be done without hands. Standardization is the foundation of scale and the foundation of organizational collaboration. Without standardization, there will be no collaboration. No matter whether we do distributed, ecological chain, or platform + project organization in the future, the way of internal collaboration needs to be based on standardization.
  Second, talent specialization.
  If a company wants to grow bigger, it must have easy access to resources. If a certain type of resource is difficult to obtain during the process of growing a company, its growth rate will always be stuck. For example, LeTV’s demand for capital is too great. When resources cannot be obtained, the model collapses. Resources vary widely. Returning to the organizational logic, it is talent specialization. This principle is closely related to the first principle. Business standardization allows enterprises to obtain professional human resources more easily and conveniently, while laying the foundation for collaboration between large organizations. Without standardization and specialization, it will be difficult to obtain talents. Some companies still hesitate to promote a 45-year-old general manager, and they still need training and the boss gives him a ride. This shows that your business is too complex, your talents cannot be professionalized, and your growth will be very slow. However, in a company like Alibaba, a “post-85s” was promoted to the general manager of Taobao, which shows that Taobao’s internal talent growth is much faster than that of traditional companies. Hidden in it is the logic of big companies.

  Third, professionalize management.
  Ford created mass production but hit a roadblock in the 1930s. He solved the problems of standardization of production and specialization of talents. When business bottlenecks appeared, new businesses could not develop. He limits himself and fails to address the obstacles of entrepreneurs. Sloan solved this problem. In his book “My Years at General Motors”, Sloan mainly talked about two things: first, how a company establishes divisions and how to copy new business; second, how to professionalize management. How do you lead a professional team to run your business? Sloan’s defeat of Ford was essentially a battle in which a group of people defeated one person, because after professional management, organizations can easily replicate and companies can grow and develop rapidly.
  What remains from the industrial age is nothing more than these three logics. In the Internet ecosystem, there is no need to examine each case one by one. A large amount of management is still done around these three logics. The large companies that have emerged in recent years have not essentially changed the management methods of large companies, nor have they transcended these three logics. Whether it is profit sharing, equity incentives, or business partners, they are essentially about the agency and incentive problems that exist in management professionalism. You and the shareholders are not of the same mind. How to give you management rights is a problem that needs to be solved through mechanisms. Isn’t the current artificial intelligence engaged in small orders? This method is inseparable from the two evolutions of mass production. Evolving from Ford to Toyota, Toyota’s lean production solved the problem of flexible production and reduced the minimum scale of large-scale production. Although artificial intelligence, intelligent production, and Industry 4.0 have further reduced the minimum scale, their principles remain unchanged.
The logic of small businesses: customized services, gray-scale employment, and institutionalized management

  According to our standards, enterprises with 10 billion yuan are still middle-scale enterprises, and they have not embarked on the path of large enterprises. Huawei achieved a sales scale of 12 billion yuan in 1999. At that time, its large-scale enterprise route had not been completed, and various functions had not been established. There are 40 million enterprises in China, and there are not many large enterprises. For example, when we go to college, Tsinghua University, Renmin University, and many ordinary colleges and universities will tell you when you enter that the school has trained many celebrities, great people, and scientists, so that when we enter college, we all think that we will become a great person. , in fact, most people become ordinary people after graduation. The same is true for the growth logic of enterprises. Among the 40 million enterprises, only more than 500 have exceeded 10 billion yuan. This is nothing more than this probability.
  So here comes the question, the reason for the growth of enterprises is very simple, why do most enterprises fail to make the leap and grow up? Bad luck, not catching up with the wind and the big market, this is one reason. The more important reason is that the enterprise did not find the right way, so it did not cross the past.
  In the market that Huawei was in back then, in Shenzhen City alone, there were 18 companies doing agency business like Huawei, and these companies are gone now. They are in the same position as Huawei, but they have not made the leap. For most small businesses that cannot leapfrog, letting it do what big companies do is harming it. It does not have this texture and no market base. A large number of companies are small businesses. What are the management methods of small businesses? There are roughly three types.
  First, service customization.
  The logic of small businesses is that customers are God, I want to listen to customers, I will give them whatever they want, and I will customize it specifically for you. Therefore, capacity is always the bottleneck of small businesses, because they are left to the mercy of customers. Huawei also said at the time that everything was done according to customer requirements. Customers gave orders and customers were the food and clothing parents. Huawei asked IBM to provide consultation. IBM said that unless you don’t want to become a big company, you cannot unconditionally meet customer requirements. Huawei introduced IPD (Integrated Product Development) to standardize services and solve this problem.
  Second, use grayscale.
  Small businesses think that resources are wealth, so they accommodate individuals. If you find someone available, you can customize a welfare system, a salary system, and design positions and jobs for him. This way of small businesses is to employ gray-scale personnel, which can easily lead to hilltopism, and the boss can’t handle it. Huawei also had this kind of problem in 1994. Ren Zhengfei’s solution was to “reduce the vassal” and resign from the market. Without solving this problem, small businesses will never grow big.
  Third, management is institutionalized.
  When doing consulting, you tell a small business that management must be simple and not frustrating, it must be very happy. If you say that operation is greater than management, it will be happier, and it will think that there is no need to engage in management. Their management is institutionalized and they do not pay attention to management. The commission system is used for sales, the piece-based system is used for production, and commission is also used for R&D, etc.
  Mechanism comes before management. Mechanism is a very important thing, but without management, we cannot reach the level of a large enterprise. Management is too simple, and the pursuit of ultimate simplicity is the way of small businesses. Without a mechanism, management is ineffective, and we cannot coordinate many things through mechanisms. Moreover, not everything within an enterprise can be coordinated using mechanisms. It must be promoted through management. What may happen to a small business is that in everything they do, they first consider how to divide the money. Before they can figure it out, the battle has already been fought. When big companies encounter problems, they must rely on management to ask you to do a certain job. If you don’t do it, you will be replaced. Small businesses can’t grow into big businesses if they don’t change their ways.
If a small business wants to become a big business, it must have a growth mindset

  Small businesses face a paradox: if they follow the management of large enterprises, the cost will be very high, but if they blindly follow the way of small enterprises, they will not grow. What should a small business do if it wants to grow bigger? What should we do in the process from a small business to a large enterprise? In 2014, the company organized an intensive training class for project managers. I talked about growth thinking and dynamic thinking in consulting. In the past two years, I also talked about growth thinking and how to look at management with growth thinking at the conference. If a small business wants to become a big business, it must have a growth mindset. What is a growth mindset?
  First, compromise in reality from a future perspective. A growth mindset must be focused on the future. When Huawei was doing assessment and consulting before doing the Basic Law, some experts proposed a solution for Huawei: abolish the commission system and start the performance evaluation system. After 1994, Huawei has no commission system. According to the KPI of the year, the sales revenue index of a salesman accounted for no more than 20% of the assessment, and most of the others were procedural and non-financial indicators. This result is rooted in Ren Zhengfei’s future-oriented thinking. He believes that evaluation must be based on strategy. The commission system is actually equivalent to reducing the legitimacy of management. It is easy to form a wrong understanding. If I complete the target, I will get the money I should get. If I fail to complete the target, you will deduct the money. I should deduct the money and don’t worry about other things. Huawei’s strategy-based evaluation system was not built in one step. In its early days, its strategic management capabilities were not that strong. It was only in 2000 that it used the balanced scorecard to gradually establish a strategy-based evaluation system. Huawei has always been future-oriented and constantly iterating based on realistic conditions.
  When we serve as consultants for companies, we will design a plan for them, but in fact this plan is not the most important. What is important is that we have to talk to the customer about what state you want to achieve in the future. The current plan is just a compromise to realistic conditions. We have to look to the future and move forward. The trouble that many companies encounter now is that they regard this plan as an unchanging plan that will not waver for a hundred years. Establishing a mechanism and a platform allows others to do it, and I can still make a lot of money while standing by. This is an ideal state, but this state cannot actually exist. When an enterprise has an ideal or a concept and moves forward along the way, its evaluation system will continue to be close to that idea. This is leading reality from a future perspective.
  Secondly, use a dynamic perspective to iterate during scrolling. There is no immutable plan. For example, Huawei’s values ​​​​advocate for strivers, and its identification standards are iterative. Huawei knows that the ideal talent is a striver. In the early days, the company’s criteria for identifying strivers was very simple: whoever buys the company’s equity is a striver. If you dare to invest money here, you are a striver and the company’s community of destiny. Later, Huawei encountered difficulties. Its stocks became valuable. Investment became a welfare rather than a symbol of strivers. The new identification standard became active work. The standards for Huawei strivers are dynamically adjusted in reality.
  A growth mindset is a state of constant reflection and improvement. As a small business, if you want to move into the future, you must constantly review your management system, otherwise your management system will genetically limit your growth. From this perspective, growth thinking includes change thinking.
  In fact, in the state of a small enterprise, it is difficult to predict when it will become a large enterprise. The data mentioned above have shown that becoming a large enterprise is a small probability event. But once you find that a big opportunity has come, the trend has come, and you have stood there in advance, what should you do? You want to change and have a way to become a big enterprise. Therefore, in our enterprise growth model, from the entrepreneurial stage to the opportunity growth stage, the key point of change is to survive. When I started my business, I didn’t know that I could become a big company. Survival was the most important thing. I had to be able to get orders, catch tigers and eat tigers, and catch mice and eat mice.
  Not all enterprises can become large enterprises. When a small number of enterprises encounter an open window of opportunity, can they change their management in a timely manner so as to become a large enterprise? For example, if Huawei does not organize its business and change the habits of small companies at this time, it will not be able to maintain its position in the industry today. Change is very important. In the process of change, how to ensure the organization, how to build mechanisms, and whether it has its own methodology, values, and philosophical foundations are all key issues. Thinking about change should be done from the perspective of the system and in a professional way. Even if the profession has to discount the reality and make a little compromise in the operation process, it will still effectively promote the growth of the enterprise.

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