On New Year's Day 2022, "Ten Questions Noah" was first released, which is a rare content in the financial industry with introspection questions as the core, which truly confronts and responds to the focus of Noah's change. Wang Jingbo, the head of Noah, answered the first question in detail with an annual speech "Change and Order": Why does Noah want to change.
Once "Change and Order" was issued, it received support and feedback from many customers and employees, which were like "gifts" in Noah's change forward... And Noah's internal thinking and discussion is also continuing: what is customer-centric, and what does Noah use to retain the hearts of customers?
Coinciding with the start of the Spring Festival in the Year of the Tiger, Wang Jingbo issued an internal letter of more than 10,000 words to internal employees, explaining how Noah practiced his words and achieved "customer-centricity" by "achieving caring heart with professional achievements". The letter also answers the second and third questions of Noah's Ten Questions in a more granular way...
The following is the full text of the internal letter (excerpt):
Professional achievement of caring heart
In 2021, Noah will fully launch the reform from the "end-to-end" service of customers by financial planners to the "iron triangle" model to serve customers, and promote the transformation of the Basic Law from "commission-driven" to "qualifications, examinations and evaluations, and guided collaboration" of financial planners. The process was not easy, but good results were achieved and customer satisfaction was greatly improved.
Change begins with myself, the New Year of the Tiger, I have this idea, and I write a verbatim manuscript of my own cognitive iteration in promoting change.
First, with professional achievements of caring heart
Noah's transformation begins with "knowing yourself" and knowing your ecological niche. The future positioning of Noah is "a supplement to mainstream financial institutions", a wealth management company that focuses on serving high-net-worth customers and "one out of a hundred". We must always maintain a sense of reverence for the financial industry and respect the common sense of the industry. Noah should go from "product-driven" to "customer-centric, survival-oriented, and professional-oriented", connecting the world's outstanding asset management companies.
Noah's new brand connotation is: above wealth, see more wisdom in life, and achieve caring heart with professional achievements.
There is a famous theory in production management, the "Hayne's Law", which states that behind every serious risk event, there must be 29 minor risk accidents and 300 attempted precursors and 1,000 accident hazards. In the past, Noah's competitors in the front line were destroyed by companies based on capital pooling, rigid payment, self-financing and other models. These don't actually happen in a day.
Today, Noah's colleagues, especially the frontline 3Rs, believe that they will better understand what it means to "achieve a caring heart with professionalism". Saying this sentence today means something different to us.
In 2021, a lot of extreme things have happened in the industry, and Noah can still be relatively calm, with healthy income, no debt, and new profits, which means that we have a certain cognitive advantage over some companies.
The so-called advantage and success is the ability to constantly bypass the trap. The advantage that a company has is never to make mistakes or not to encounter risk events, but the ability to cross risks. It's not that we were lucky not to step on mines, but because of some ability built up by cognition, we don't have anything to do with these mines.
I believe in the saying that when we encounter an obstacle, it means that we are related to the obstacle. Some people are not related to certain obstacles, such as encountering a big river, you can't cross it, but the eagle has no feeling for the river, because the big river does not constitute an obstacle to it.
The real cognitive advantage is not to fall into what most people think is an obstacle.
In life and work, we are constantly making mistakes and experiencing pain. Making mistakes is fatalism, and the difference is that mistakes are made in different ways. Some are "making mistakes right" and some are "making mistakes wrongly." The first-class battle on the Titanic is about "making mistakes by mistake."
Noah started his business in 2005, went public in 2010, and after 2012, the wealth management industry exploded with the large-scale entry of banks. However, because of the long-term existence of "capital pool", "rigid payment", "product-driven" and "commission-driven", the entire industry is in a false boom period, and there has been a long-term situation of "bad currency expelling good money" in the market. False prosperity lures industry practitioners to waste valuable resources on a gradually illusory and disappearing model.
In the process of industry development, Noah has maintained a sober mind, coupled with our deep reflection after encountering risks. With the gradual maturity of the industry's regulatory approach, we chose transformation and change 7 quarters earlier than the industry, not only giving up the "first class on the Titanic", but directly docking and giving up a sea.
But our cognition is not yet fully in place, although there is insight into the wealth management industry, there is a strong willingness to survive, but we do not know how to break through. It wasn't until a few months later that we were exposed to Huawei's "crisis management" and opened a window for us.
Looking back at 2021, I divide it into two segments: before 6.30 and after 6.30
Before June 30, 2021, while we are doing the ideological loosening of the soil of change, we will linger on the glory of the past, retain the past mode of operation, and carefully prepare to fight an ended war under the impetus of inertia. Our explicit pursuit is still performance, elite financial planners, and scale.
We have the right insight into the future, but we haven't kept up with the action, we've experienced risks, we've maintained a certain level of sobriety, but we haven't gotten stronger yet. Because we haven't really made a change, we're still in our comfort zone, focusing on the optimization of past strengths. A firm end to yesterday's war is what we should do.
After 6.30, we are determined to put an end to yesterday's war.
Competing for first class on the Titanic is a tragic thing to do, but it's also an easy mistake to make. The reason is that when we were already in the Titanic, our target was only on this ship, not knowing that the ship was sinking.
We understand that breaking through the limits can make the circle of ability larger. After June 30, 2021, the pace of change begins to increase, but the "challenge" also accelerates. Once again, I realized that the smooth construction of a new Noah's Ark was a difficult task.
In 2021, the wealth management and asset management industry has been transformed by paradigm, industrial changes, business ecology and characteristic positioning are different from the past, the industry has ushered in the inflection point of business model evolution, because of the past Noah's choice and the current competitive position, we can only firmly promote change, with a more advanced management model, from strategy to execution, it is possible to achieve a competitive breakthrough.
The inflection point of the industry I think is in the following four aspects:
1) Regulatory cycle: the relaxation cycle ends, and the sales orientation becomes the past;
2) Product cycle: assets migrate from real estate to public funds, embracing the era of equity;
3) Competitive landscape: replace "sales thinking" with "customer thinking" as the source;
4) The gradual maturity of investors and practitioners, the aging of the population and the growth of residents' wealth have brought about the growth of the industry.
Third, ignorance is bliss, and cognition is suffering
At the bottom of Noah's transformation is the new culture that Noah wants to create: Noah people must have the spirit of pursuing the truth. The company wants to build such a soil to provide a stage for people who are willing to learn for life and pursue the truth, and let the company grow by making these people successful.
In the face of problems, Noahs should pursue fundamental solutions, not phenomenon solutions. Why does this question arise and what is the essence of the problem? Without the pursuit of truth, many questions may not have answers.
For the past 18 years, Noah has driven its business through products, and products are our engines. We use our products to serve our customers and conform to the development of the wealth management industry.
Today, Noah proposes that the shift from "product-driven" to "customer-centric, survival-oriented" may require a new business assumption to understand customer needs, lead customer needs, and create value for customers. For the process of value creation, re-identification, distribution based on value creation. The process of value creation is centered around the customer and its customer experience. The new business assumptions bring new enlightenment and requirements to Noah's business management, and the interaction between the company and customers has become the core place for us to create customer value.
For Noah, we need a whole new ability to operate, we need not just financial planners to interact with customers, but must be the company to build organizational capabilities, three-dimensional and matrix to interact with customers.
Noah's reform, the first to promote is the organizational management model, from the linear management of the division system, to the matrix management; from the financial planner one-to-one service to the iron triangle model to serve the customer; to the team and the city as the new minimum unit economic model, to serve customers, the establishment of a new incentive mechanism with examination and evaluation, are from linear management to matrix management, from personal elites, personal leadership to the construction of organizational capabilities.
"Matrix management" means that it is managed with two lines. Matrix management adds a dimension to linear and divisional management. Instead of paralleling or coinciding with existing dimensions, it increases. Efficiency may be slow, but because there are more angles and dimensions, the amount of information, accuracy and quality should be better.
Drucker said that "management" is to remove all the links that do not create value and optimize the links that create value. I think this is the same as Huawei's "force out of a hole, out of a hole", is also the same.
Huawei's core culture, I understand and Noah's pursuit is the same, first of all, respect for common sense, reverence for the market; then understand human nature, create value, identify value, distribute value; put the underlying basic concept, firmly implement in management, knowledge and action, and practice words.
Fourth, cognition is change - changing cognition can drive change
It is very difficult to know common sense, and it is difficult to maintain awareness of events that violate common sense.
Human cognition is the invisible hand of the entire human evolution, and Noah's change is essentially the process that noahs must go through to improve the overall cognitive level of Noahs. If we can't face it, invest energy to persuade and use action to advance, let the team build a new understanding, the possibility of change failure is very large, historical experience, the probability of success of change is very low.
The challenge of change, in addition to cognition, is also the problem of building new capabilities, and the people who ran Noah in the past, from founders to core executives, need to build new capabilities. Construct our new understanding of ourselves, know who we are and where we are, in order to truly become an understanding person.
The goals and directions required for change are generally clear, but how to get there has not yet found the best path, so we still have to take small steps, run fast, correct and trial and error. This in turn requires us to have more wisdom and patience, maintain the curiosity of the empty cup, and be willing to learn from Huawei and explore the best path. In the past, Noah's product-driven model was only fast, and we believed that "fast and scale" could take away a lot of management problems. Now we learn from "Huawei" to "win first and then fight". This is a long, ongoing process.
Munger says the biggest benefit of learning physics, biology and meteorology in his early years was that he "avoided making himself a hammer." Meaning, when you have a hammer in your hand, you see everything as a nail. When you only have a hammer in your toolbox, your way to solve the problem can only be single. Over time, you really become a hammer.
Cross-border learning from Huawei is essentially to let Noah have enough tools in his toolbox, and at the same time, to avoid an infinite number of tools. Because this is a toolbox, not a tool repository. There is an intrinsic connection between the tools in the toolbox. Its complexity ultimately comes down to simplicity—the simplicity of solving a specific problem. This is "the complexity of the starting point, the simplicity of the result".
Huawei's management model, LTC, listing is the upper volume, etc., in fact, behind the management philosophy, "the simplicity of the result, I go all out; the simplicity of the process, I scoff." In driving change, we must make trade-offs. Processes have become longer, efficiencies have slowed down, but we have discussed them more fully, with more dimensions and with higher quality.
And these cognitions, management to build consensus, pull through and alignment, but also to grasp the "degree" in the process. This is also where I have a lot of respect for Huawei — almost all Huawei people speak almost the same language, and the meaning is not biased.
As a practitioner of wealth management and asset management, we must protect the wealth of our customers no matter what the environment. This largely depends on the client's asset allocation and portfolio, and is where Noah should be able to develop his professional abilities and achieve a caring heart with professional achievement.
February 2022
Wang Jingbo
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