Chen Chunhua's latest speech: In the great changes, how can the CEO lead the enterprise to overcome the crisis?

Introduction: The impact of the epidemic is inevitable, what responsibilities must managers assume if they want to lead enterprises through the crisis? What are the commonalities among great CEOs? At the 2021 Business Review Management Action Summit, Professor Chen Chunhua pointed out that the more confused you are, the more leaders must become a light in the dark.

Someone asked me who is most important in the midst of confusion? Leaders are the most important. He must show people the way forward in the darkness with his faint light, and he must also have a clear concentration to keep people stable in the face of uncertainty.

Of course, more importantly, he must be able to transcend the crisis, lead everyone forward, and achieve success.

01

Be a consistent winner

From my personal years of research on organizations, I've always believed that there should be three types of businesses.

1. Temporary winner

When we discuss the temporary victor, you will find that it is an opportunist. However, the course of human history tells us: "When you get one opportunity, it means that you may lose another opportunity." "Therefore, if many companies are accustomed to seeking their own strength and growth model in the industrial age and are not willing to give up, they will find it very difficult to do digital transformation."

2． Stage winners

For a stage winner, it will be successful for longer than a temporary winner. Why? Because it does solve practical problems. When you can really solve a real problem, you will indeed succeed for a relatively long time.

3. Persistent winners

However, we have found that those companies that are particularly good are actually the winners of sustainability. Their commonality, which is what is often said now: "They are long-termists." "They are able to constantly focus on value creation and thus be able to overcome crises."

There is no such thing as good or bad for all three of these organizations, because they have all made their contributions at different stages. However, we prefer that companies have a sustainable path, that is, to become a sustainable winner.

If the enterprise wants to seek a sustainable path, the responsibility will fall on the top leader of the enterprise, which is precisely the fundamental problem that the CEO who is the top leader of the enterprise must face - how to let the enterprise interact with the environment, how to let the enterprise not fall into crisis, how to let the enterprise take a sustainable growth path.

Sometimes, when I talk to business leaders, they may say, "Teacher Chen, I want to make the company the first in the whole industry and the first in the world." I often tell them: "This should not be the goal we pursue, the most important thing for us is whether we can continue to develop and make our own efforts for social progress." ”

02

Historically, the commonality of great CEOs

We can look back at what management contributions have been made by those representative CEOs in each era of change? In this way, we know what kind of management contribution the CEO should make when a new era of change comes.

The first is the post-World War II era, represented by General Motors CEO Sloan. What was his contribution? He pioneered the balance between decentralization and centralization of financial control, and the management of large companies must be decentralized under centralized coordination. He also deeply understands the needs of employees and inspires employees with a management philosophy based on human nature. Under his leadership, GM, which was on the verge of bankruptcy, turned defeat into victory within 3 years. The corporate principles he established are still recognized as exemplars of corporate thinking.

This was followed by the economic downturn of the early 1970s. During this period, many companies sought to diversify and form a larger scale through the combination of multiple businesses to resist the crisis on a larger scale. The representative figure is Harold Jenin, CEO of the International Telephone and Telegraph Corporation (ITT). Through diversified mergers and acquisitions, he made the company a large multinational company in a very short period of time. However, we are also well aware that after he left office, with the recovery of economic development and the emergence of new technologies, his management style did not work, and eventually, the company was merged.

Further down, in the 1980s and early 1990s, the most prominent figure was General Electric CEO Jack Welch. During this period, globalization and the global supply chain pattern were formed, and high-quality and inexpensive products represented by Made in Japan swept the world. How to obtain the business performance of enterprises at a lower cost and with higher efficiency has become the key. Under Jack Welch's leadership, GE implemented Six Sigma standards, defined the plan management of core business unit strategies, diversified mergers and acquisitions, and achieved a lean management model. In the end, Jack Welch led GE to become the world's most valuable company, and he himself was also known as the world's first CEO.

Then we came to the stage of the new technological revolution, that is, from the 1990s to the beginning of the 21st century. The biggest features of this period are the high productivity brought about by technological innovation, the huge stock market value, and the continuous expansion of venture capital. The typical representative figure is Microsoft CEO Bill Gates, who uses creative business models to transform the technology products offered from serving professional institutions to serving everyone, so that everyone finally has the opportunity to enter the digital world today. From that time, we needed CEOs to have four characteristics: business model innovation, productivity, speed, and shareholder value, and Bill Gates undoubtedly had the most of these characteristics.

Finally, we enter the 21st century. The emergence of the Internet and digital technology has brought about great changes such as intelligent revolution and subversive innovation, and iteration and innovation are emerging in an endless stream. Technology permeates people's lives, requiring companies to pay more attention to social responsibility and make the world a better place. In this period, there are many representative figures, such as Apple's Jobs, Google's Larry Page, Amazon's Bezos, Tesla's Musk, Huawei's Ren Zhengfei, Tencent's Ma Huateng and so on.

Looking back at history, we will find that a good CEO must be:

Ability to deeply understand the uncertainty and nature of the environment;

Ability to lead organizations to build core competencies to deal with uncertainty and gain vitality;

Be able to give confidence to the members of the organization, lead them through the crisis, and seek their own value;

To enable the organization to have a clear mission and values, to be able to take on and face the challenges of the environment based on social responsibility.

03

Four things CEO does to overcome a crisis

Along this line of thinking, we can get a very clear concept: CEO leading the company through the crisis and becoming a sustainable winner is the basic choice. If the CEO can't do it, he's not up to his role as CEO. If the CEO is just getting the business to grow in scale and put the business in a good position in the industry, I don't think you've really led the business through the crisis.

All CEOs who want to overcome a crisis must return to sustainability. And what exactly does the CEO need to do to lead the business to sustainability? In my opinion, he should do four aspects of work so that he can lead the company through the crisis and become a sustainable winner.

1． Adhere to a clear and focused core business strategy.

For a long time in recent times, many people have asked me, should I diversify, or return to specialization? I have always answered this question very simply: if we talk about diversification and specialization, we are still stuck in the industrial age. And we are now in the digital age, and its basic state is ecology. Therefore, any enterprise must open its boundaries and integrate into the ecology. To do this, companies must have a stronger capability: core values and irreplaceability.

For more than a decade, I have been talking to you about synergy and symbiosis because this is the state in which the basic organization is located. In this state, how do you have the ability to connect with everyone? You must have a core career strategy and must have the ability to make yourself irreplaceable.

What really affects the sustainable success of the enterprise is not the specific strategic goal of the enterprise, nor the accuracy of the development strategy, in fact, what is more important is that the enterprise can focus on the value growth of the core business, focus on the realization of the core value, and focus on the field of coexistence with customers.

What are the biggest features of today's environment? It is beyond the industry, and all industries are no longer within the scope of the original industry. When you surpass the industry, whether you can really obtain the core value depends on whether you can focus on irreplaceability and make the real value. If you can, you can really help your business grow and have your own core business.

When you have the power to practice the core business and core values, customers will choose to be with you, so that you basically have a value acquisition ability to overcome the crisis.

2． Continuously meet customer expectations and create customer value.

The biggest challenge we encounter today is that we must be able to truly innovate value for our customers. This is also the core difference between the industrial age and the digital age, the industrial age is to meet the needs of customers, the digital age must innovate the needs of customers.

Therefore, we say that whether we can lead enterprises to keep up with the pace of customer changes, whether we can innovate around customer value creation, and whether we can create new customer value is a dividing line to test whether the CEO is excellent.

I also teach EMBA students who will proudly tell you that they have management experience and a deep understanding of the industry. I often joke that you are getting old because your way of thinking is from the past to the present to the future, which is a process of aging. And we now need to grow backwards, never look at the present, so that we can continue to become young, in order to understand the rejuvenation of customers.

3． Build dynamic and open organizational capabilities.

We see that many enterprises have difficulty in the process of digital transformation, because there are departmental walls inside the organization and moats on the outside, and there is no way to open themselves and truly collaborate with more opportunities. And what are the biggest characteristics of those leading companies? There is no departmental wall inside, and there is more connection and collaboration on the outside. If you can't do that, you can't help your business weather the crisis.

Therefore, for the CEO of the enterprise, it must have a very important ability, that is, in the institutional arrangement, process transformation and growth ability of the enterprise, it must be truly adapted to the environment and changes. If he didn't have that ability, I'm sure he's unlikely to succeed today, because only by really opening the boundaries inside and outside the organization and helping everyone find the ability to synergize and coexist can he gain trust and build a broader business space and room for growth.

4． Establish a corporate culture of symbiosis and goodness.

In the past, we used to say that companies should be in business, but today we probably can't say that because our business system is having a huge impact on people's lives, work, and daily behavior. When you have these powers, the most important thing for you is whether you are willing to coexist with society, symbiosis with the industry, and symbiosis with everyone, and whether the power you have is good and altruistic, which can help everyone grow.

I said in the book "The Essence of Business" that your profit must have a deep sense of human concern. Without the profitability of human care, it is unlikely to create truly meaningful value today. So, I often say that today for organizations, your influencing factors have shifted from the internal to the outside, and how to self-discipline and seek altruism is an adjustment of philosophical beliefs for everyone and every business.

Without the true power for good, the ability to self-discipline, and the commitment to a better life for society, we have no ability to interact and interact with the outside world. And the strength of any organization can only come from communication with the outside.

Ceos, I hope you can really understand that the most important thing for a CEO who can lead the company through the crisis is not to complain about reality and not to succumb to reality.

I've always liked the saying: we don't have illusions, we don't expect more, but we also don't wait.

So, when we really have to face reality and overcome crises, I believe the most important thing is to make us responsible for ourselves. As long as we strive to shoulder our responsibilities, we will certainly have the ability to lead everyone through the crisis. As long as we are willing to commit ourselves to social responsibility, we must have the opportunities that society provides.

As 2022 comes, let's work together to find a new kind of growth and work together to make the world a better place. (End of this article)