The purpose and mission of the enterprise is to maximize the arousal of endogenous power. The next step is strategy, which is to guide the ability of enterprises to create value to the needs of customers. Then build a business model, establish a connection between the two, and form a virtuous circle.
For start-ups, not only the ability to create value, but also the needs of customers. Establishing these two conditions becomes the initial task of corporate strategy, and the core content is strengths and opportunities.
Entrepreneurs should make a fuss about their strengths, and guide their strengths to the needs of society, to the potential market demand, and form the initial ability and business value.
To quote Thiel, a great cause often begins with a secret. There should be two elements in this secret: social needs and core competencies. The so-called secret is that it is possible to connect the two, to connect the needs that others have not discovered and the abilities that others do not have.
The essential prescriptive nature of this strategy will not change as the scale of the enterprise expands. What has changed is only the strategic form, that is, how to guide the ability to things with commercial value, how to guide the ability to the needs of customers in accordance with business logic, form the business theory of the enterprise, and choose the appropriate business model to maintain the virtuous circle of reproduction.
First, make a fuss about your strengths
Entrepreneurs should know how to build their business on strengths. Just like a person, if there is no strength, others can't find words if they want to praise a few words, and there is no value and reason for existence.
Strength is a resource, is a human talent and talent, just like strange grass and flowers, heavenly creation, rare, need to be collected with heart. Finding people with unique talents is the starting point for an entrepreneur's strategy.
Gathering people with unique talents, even one or two people with extraordinary skills, can become a decent enterprise, and the key is to turn the unique talents of these individuals into things that more people can do, things with commercial value, so-called products and services.
Then, stick to the line, do what you can do well, be the best version of yourself, and single-mindedly cultivate the business model of the enterprise. Just like a pregnant woman, single-mindedly conceiving a healthy baby, full of joy and expectation, patiently passing through the gestation period of 0 to 1. This is also called the dividend of the entrepreneurial period.
In this sense, strategy is to create oneself, to create a business model in the process of creating customers. No woman is in a hurry to rely on the capital market or funders to adopt a group of monkeys and become a monkey trickster.
Every enterprise must rely on the core ability of value creation, rely on the talent, initiative and creativity of all members, and obtain the long-term existence value of the enterprise; rather than relying on endogenous extreme forces, continuously expand the scale of production and marketing, and obtain the sense of existence of the enterprise.
This is a challenge for entrepreneurs, entrepreneurs must have a mind, know how to cooperate and win-win, know how to fight the world in a group, rather than the world, and know how to integrate everyone's strengths and transform them into the ability to create wealth.
A single person is just a resource, that is, a human resource. Only by organizing, forming a business model, and forming a system of integrated relationships with the division of labor is the source of wealth creation.
Akio Morita is a person who knows how to cooperate and an organizer with a heart. He and Inoue came together just to join forces to develop tape recorders that transformed personal talents into products, into the production capacity of products, into the ability to create material wealth.
He has a strong belief that is worth learning from later entrepreneurs, that is, the belief that technological progress is the source of human wealth.
If an enterprise wants to start well and end well, not speculate and do not do evil, it must pay attention to the ability to create value from the beginning, and build the enterprise on the strengths of people and on the basis of technological progress. Don't pin your hopes on high-end thinking or strategy.
Ford is also a fan of this technology, firmly believing that the potential of industrial technology is unlimited. In his view, strategy is a very simple thing, to let more people in society share the benefits of technological progress, including replacing manpower with machines.
Honda Soichiro is even more of a kind of person, a technical player, single-mindedly seeking technological progress, the company is called Honda Institute of Technology. He was advised to consult with consumers. That's, he said, and we're experts and know what consumers need.
Eiji Toyoda believes that creation is the starting point for creating value and creating civilization. Creation is closely related to the development of technology, and technology progresses as a result of creation. All this has always depended on people, on the accumulation of knowledge.
The source of enterprise development is the first technology. In the modern era known as high technology, enterprises cannot survive without their own independent technology.
Second, strive to find customers
For startups, strategy is to connect strengths with opportunities and direct strengths to possible business opportunities.
With the ability to create value, the company will be able to find customers. On the contrary, customers cannot be found, what they are doing has no commercial value, and the company will certainly not get better. Enterprises are like knives, customers are whetstones, only constant sharpening will make the sword immortal, empty big knives will never be sharp.
Akio Morita did not know the market at the beginning, nor did he have a strategic high-end thinking. It's normal that no one is born to be a market. As long as you have market awareness and constantly go to talk to people, you can eventually learn and establish contact with the market.
The key here is that entrepreneurs must take matters into their own hands and work tirelessly to take on two of the company's original and most important functions – innovation and marketing.
Practice bears fruit, think of more wisdom, it will not take long to produce more insights and ideas, know how to realize the customer's ideals quickly and economically, or solve the customer's problems.
After the tape recorder was developed, Akio Morita and Ino fumi dai had a division of labor, one tube market, the other tube technology.
Akio Morita practiced what he preached, like a salesman, holding products to sell everywhere and running around. He knew very well that experience had to happen to himself, and if he wouldn't sell it, don't expect others to sell it.
If you can't find a customer, don't expect someone else to find a customer. For startup owners, they must be the first responsible person for marketing and innovation.
He knew very well that if the first 50 new products could not be sold, Sony would still be stillborn, so he would have to give up his life to kill a bloody road, which is called death and rebirth.
He didn't know who would be interested in tape recorder products, no one in the world had ever seen anything like this, and it was stupid, very big, like a travel suitcase, and very expensive, 170,000 yen. He could only make carpet-style strange visits.
He came to a family liquor store, found a place to sit down, quietly recorded the sound of drunken madness, and then played it, which caused onlookers, and the hotel's regular customers persuaded the owner to buy it. When the owner inquired about the price, he was shocked and said that this toy was too expensive.
Akio Morita realizes that he has come to the wrong place and found the wrong person. The new generation they have painstakingly developed is a toy for the people of the izakaya. Time passed like this, none of the products were sold, and he really didn't know who the customer was.
One day, Akio Morita was tired and bored, and went into an antique shop to rest his feet. He saw an antique dealer looking at an old bowl and immediately paid 170,000 yen.
Akio Morita couldn't help but exclaim, "What a good deal!" It was at this point that he understood that it was actually quite simple, figuring out how many uses the tape recorder had, and then telling the likely consumers, telling the customers who had that demand.
Soon, Akio Morita found the Ministry of Education, Culture, Sports, Science and Technology, and promoted it to primary and secondary schools through the Ministry of Education, Culture, Sports, Science and Technology, using tape recorders to assist in Teaching English.
After the war, the United States occupied Japan and asked Japan to popularize English teaching, and at that time, Japanese English teachers were in short supply, and with tape recorders, teachers were liberated and could educate more students with limited teachers.
Students can listen over and over again around the tape recorder and learn over and over again. In particular, you can record your own voice, compare it repeatedly, and correct your pronunciation.
Akio Morita also approached the Metropolitan Police Department and replaced the stenographer with a tape recorder. At that time, the Japanese people were not happy, social security was very poor, and bad incidents such as petty theft and fighting were frequent.
Because there were too few stenographers recording confessions, the Metropolitan Police Department was overcrowded. Sony's tape recorders replaced manpower with machines, doing the Metropolitan Police Department a big favor.
What the future will be, it is difficult for anyone to predict, can only concentrate on, grope forward, and be the best version of themselves. According to Kenichi Omae, the strategy is to continuously expand the free choice space in the future, so that the road of the enterprise is getting wider and wider.
The vast majority of entrepreneurs are self-made and have little good education. The more things you have experienced, the more strategic minds you will naturally have. Just like a person's strength, it is practiced, not listened to in lectures, nor eaten by eating melons.
We are not against learning, nor are we against listening to lectures. On the contrary, entrepreneurs are a group of people who are open-minded and eager to learn, and they are a group of people who carry their lives to learn.
However, they do not learn for the sake of learning, they learn to promote thinking, but also need to practice and practice their own mental methods. Confucius said: To learn without thinking is to be reckless, and to think without learning is to perish.
The mental method has enabled some entrepreneurs to move from success to greater success. The entrepreneur's mind will not simply be acquired, nor can it be simply taught.
The mental method is also related to reading countless people and cultivating human feelings. Eat a trench, grow a wisdom. Not personal experience, on paper to finally feel shallow.
High-end thinking, mental models, or mental methods are not tools and methods. Without the mental method, SWOT analysis is useless, and it is impossible to distinguish between advantages and disadvantages, opportunities and threats.
The ancients clouded, the avenue was unskilled. Never substitute tools and methods for continuous effort and hard work, as well as the mental methods thus cultivated.
Third, the core content of the strategy
After the company completes the 0 to 1 entrepreneurial period, it has formed the ability to do things or value creation that the company can do, and has stable customers.
The core content of the strategy is to guide the company's capabilities to the needs of customers. How to boot? This requires a business-logical theory of business.
Founded in 1943, IKEA is a swedish merchant with 280 malls in 38 countries and regions around the world, each with tens of thousands of square meters of business space, operating more than 10,000 kinds of products, from plants and living room supplies, to toys and entire kitchens, with everything you need to furnish your home.
Behind such a huge empire, there is no extraordinary competitive strategy or strategy, or even a unique core technology, only simple business logic, the so-called career theory.
IKEA's founder, Ingvar Kamprad, began his business as a teenager, selling matches to his neighbors, then fish, Ornaments for Christmas trees, seeds, ballpoint pens and pencils, all the way to furniture.
He found a problem, the merchants are selling cattle across the mountain, asking for prices in the sky, bargaining on the spot, and fighting for a price. Customers really need real things, not bargains. So he decided to open a store, sit as a merchant, and display the most cost-effective goods there for customers to choose.
This is the right way of business.
Next, the logical puzzle is, how to attract customers to come and visit? So he built the first store of 47,000 square meters, replacing the "existence value" of the brand or word of mouth with the "sense of presence" in volume to attract customers.
With such a large operating area, the trouble is even greater. Enterprise strategy is to follow the logic of business, step by step to think, see the devil kill the devil, see the Buddha kill the Buddha, until the four are empty, the logic of business is thoroughly explained, and the cause theory of the enterprise is formed.
According to Drucker, the cause of the enterprise is beyond the life of a person, and it must be made clear, so that everyone can go down the theory of this cause together.
To operate such a huge area, it is necessary to maintain 20% of the best-selling products while increasing the number of varieties per unit area in order to attract more customers and continuously increase the single customer turnover.
Ingwa thought of forming three functional teams. This forced him to embark on the path of running a business and trying to build a business model, rather than just using himself as a retail channel.
First, the procurement team, according to the needs of customers, global search, customization and procurement. When China held its first Canton Fair, the team came to look for goods and inquire about prices.
Second, the storage and transportation team, relying on sales statistics and market forecasts, continuously adjusts the inventory structure on the basis of information management, continuously replenishes new goods and eliminates unsalable goods, and accelerates the turnover of goods.
The third is the promotion team, in accordance with the habits of customers living at home, arranges purchase venues with a sense of scene, such as living rooms, bedrooms, children's rooms, study rooms, etc., so that customers have an immersive feeling. At the same time, make a sales guide, pictures and texts, write down the price and number, convenient for customers to choose.
Thinking along this line of thought, the natural question is, how to integrate these three functional teams to form an internal unity? This is the establishment of a product catalog design team, by this core team to lead the procurement, storage and transportation, promotion of the three teams, to ensure that the three teams efficient and orderly operation.
This is the real strategic thinking, the strategic thinking of running a good business. So far, local furniture retail companies have not established this kind of strategic thinking, that is, to establish a design team for the catalog and put this team at the core to promote the sustainable development of the business.
With the product catalog design team, IKEA has embarked on a smooth path step by step, and the road has become wider and wider.
From the evolution of commodity catalog design to commodity design, as well as the overall design of the home, and drive the continuous development of various functional teams, forming a strong business model, from product business model to enterprise business model, has developed to industrial business model.
Today, IKEA has 1,300 suppliers in 53 countries around the world, becoming the organizer of the industrial value chain.
According to Porter, IKEA is a retail company without core technology, but it can rely on the business model to deal with the contradiction between supply efficiency and demand utility, effectively meet the needs of customers, and fulfill the mission of the enterprise.
IKEA's ideal is to create a better daily life for the masses. Its business philosophy is to provide a wide variety of household items that are beautiful and practical and affordable for the people.
Fourth, the strategic tasks
The fundamental problem facing enterprises is how to maintain a virtuous cycle of reproduction. The key to success or failure is to maintain a balance between production and consumption. If the competitive factor is added, then the balance between production, consumption and competition must be maintained.
The task of the enterprise strategy is to solve the fundamental problems of the enterprise, to solve the problem of the virtuous circle of reproduction, and to solve the problem of the balance between production, consumption and competition.
In other words, in a longer time span, in a larger space, solve the balance between "developing enterprises, achieving customers, and surpassing opponents"; or, deal with the dynamic relationship between enterprises, customers and competitors, and maintain a virtuous cycle of self-reproduction.
Strategy is a state of maintaining a virtuous cycle of enterprise reproduction. Just like a person, if you want to live a good life, you rely on wisdom and realm, not on strategy and strategy. There is a saying that goes like this: The organs calculated too cleverly, but they mistook Qingqing's life.
The choice of enterprise strategy is mainly to choose between the three models of "product management, enterprise operation and industrial operation". In this sense, the strategy of the enterprise is a choice of business model, and there is not much strategy to speak of.
Many people do not understand corporate strategy as a career theory and business model under the mission vision, but as a competitive strategy and a strategic trick with a flash in the pan. As everyone knows, defeating your opponents does not ensure that you will survive for a long time, let alone that you can grow into a first-class enterprise.
At that time, the Casio brothers competed in the market with calculators, and they were shocked, because the vision was full of giant companies, including Canon, Sony, Hitachi, and Sharp, and so on. How do you win the competition? After in-depth analysis and observation, they found that Sharp dominated the market with the strategy of "changing varieties, changing yields and changing prices", and gained 17% of the market share.
The Casio brothers have renewed their varieties at a rate of 50%, reduced prices at a rate of 100%, increased production at a rate of 200%, and rapidly risen to become the leading boss in the electronic calculator market.
What the Casio brothers do can only be regarded as a competitive strategy, a competitive strategy in the product business model, just like the financial strategy, the 4P strategy, the personnel strategy, is the strategy of doing specific things.
However, all these things and strategies must be integrated under the business model chosen by the enterprise and under the fundamental tasks of the corporate strategy.
If there is no constraint of the business model, only the requirements of profit maximization, then the competitive strategy may be understood as the strategy of the enterprise, Porter's "Competitive Strategy" and "Competitive Advantage" in the theory, by many people misunderstood as the theory of enterprise strategy, and the analysis of the five competitiveness, that is, the five forces model, as a tool for studying the enterprise strategy.
Although the term strategy comes from war, its application to the realm of commercial activity is by no means the same as competitive strategy. Some people understand commercial activities as business wars, and think that shopping malls are like battlefields, which is a misunderstanding.
The essence of the field of business activity is to create rather than plunder, to compete for the market rather than to attack the opponent, to compete rather than destroy the opponent. The direct reason for the elimination of enterprises should be abandoned by customers, rather than being attacked by opponents.
In this regard, the mall is different from the battlefield. Malls are like arenas or arenas, and they can't directly attack or bring down opponents. Even in a matchmaking match, the cards must be played according to the rules. Abandon all counterfeiting and deception. If we do not abide by the trade routes and do not abide by the rules of business, the industrial society will never have a peaceful day.
When we say attacking a competitor's weak link, breaking the opponent's connection with the customer, etc., we are usually using military terminology, but it is completely different from the scene of war.
The real business scenario is to play to your own strengths, avoid your own shortcomings, and form your own comparative advantage in the links that opponents ignore and customers think are valuable. Taking 10,000 steps back, Shangdao emphasizes that adults reach out to themselves, express goodwill, and do not do to others what they do not want.
At least do not harm others and do not do evil for the sake of self-interest.
With the progress of civilization of the times, industrial society has begun to break away from the jungle state, corporate strategy is no longer a strategy or strategy to defeat the enemy and survive, and enterprises cannot use rough means to directly attack opponents or eliminate opponents.
The strategic concept of the enterprise must be changed, relying on value creation ability and excellent market performance to win the favor of customers, stand on its own in the industrial society, and become a part of the functional society.
As the fundamental task of the strategy, to maintain the virtuous cycle of enterprise reproduction, in addition to the product business model, there is a better model, which is the business model and the industrial business model.
Chandler's book "The Visible Hand" systematically summarizes the successful experience of large American companies, that is, to use the visible hand of management to coordinate the whole process of enterprise reproduction, including distributors and retailers, to ensure that products can quickly reach consumers through all aspects of distribution and retail.
Chandler rejected two fundamental principles of economics with indisputable facts, namely economies of scale and market coordination. He believes that whether an enterprise can succeed, including whether it can be profitable, does not lie in scale, but in speed, in the speed of production, circulation, exchange, and consumption.
The speed of adoption depends on the ability to pass, on the ability to manage coordination, on the ability to coordinate dealers, retailers, and even consumers.
This tells us that the sustainable development of enterprises cannot stay in the way of thinking of products, cannot stay in the relationship between products and demand, and cannot stay in the mode of product management.
It is necessary to jump out of the thinking of seeing things and not seeing people, follow the route of the reproduction cycle of enterprises, and form a relationship system of supply and demand integration with upstream suppliers and downstream distributors.
Here, it may be better to name this as the business model. According to Porter, it is a backward integration strategy and a forward integration strategy.
Nowadays, the specialized division of labor in industrial society is becoming more and more refined, and the integration after the division of labor is becoming more and more difficult, that is, the invisible hand is becoming more and more powerless, and the so-called market mechanism fails. Maintaining the reproduction cycle of enterprises depends on a higher strategic form, which is the industrial business model.
Some economists claim that the 21st century will be the era of multinational companies, which play the role of organizers of industrial value chain networks in the global economy, build one industrial business model after another, and maintain the reproduction cycle of member enterprises.
In Japan, major general trading companies are the organizers of the industrial value chain. They rely on the industrial business model to build an ecological value chain of the industrial value chain and maintain the cycle of reproduction of related enterprises. It can be said that the industrial business model is the secret of the longevity of the enterprise, and it is the secret of the century-old enterprise.
Fifth, the product business model
As a model of enterprise strategy, the product business model is the natural choice of start-ups, but its role is limited, and in the competitive landscape of today's world, it is difficult to maintain a virtuous cycle of reproduction for a long time.
Ford's initial choice is no exception, choosing a product business model, and playing this model to the fullest, winning the great glory of the enterprise. However, he did not surpass himself, turned to the business model in a timely manner, and was surpassed by General Motors in just 30 years.
Ford was a technical player, and as early as 1896, he worked as an engineer for Edison while developing his own cars. That's his strength, and it's his interest.
After 12 years of hard work, he turned his abilities and strengths into a commodity that could be sold, and developed the Model T in 1908. The car's performance exceeded that of all the cars of the time, including the Mercedes-Benz cars in Germany.
After another 5 years of hard work, he replaced manpower with machines, and in 1913 developed a fixed assembly line, forming a value creation process for the T-type car. This greatly increases production capacity and yield, and greatly reduces costs and selling prices.
In 1908, Ford cars sold for $780, and peers sold for more than $2,500. In 1915, the Ford car sold for $200.
Between 1908 and 1927, Ford earned $1 billion, accounting for more than 50 percent of the global market share.
Although Ford does not explicitly state its mission, his business vision is focused on society as a whole.
In his view, if the people who produce cars can also afford to buy cars, then the market capacity will be very large, and the potential of industrial technology will be fully realized. With the vision of society, we can create customers and create a mass consumer market for automobiles.
Unfortunately, Ford's strategic thinking is limited to products and stays on the product business model. Even in the product, it is only an article that has done enough of the price dimension, ignoring the things in the performance dimension, resulting in the intensification of the contradiction between production efficiency and consumption utility.
According to economics, consumer utility is diminishing.
In 1918, Sloan joined General Motors and became president in 1923. He took advantage of the contradiction between supply and demand of Ford to compete and compete for Ford in the performance dimension of the product, opening up the elite route of automobile consumption, different from the past volkswagen route.
At the same time, changing the strategic form, wantonly attracting dealers, forming a relationship system of manufacturer integration, forming a business model, ensuring a virtuous cycle of the reproduction process, and blocking Ford's connection with the market. It can be said that the business model is the fundamental choice of corporate strategy.
In 1921, General Motors produced and sold 210,000 vehicles, with a market share of 7%. In 1926, these two figures rose to 1.2 million vehicles and 40% respectively. After 1940, General Motors surpassed Ford and became the leading boss.
From 1927 to 1946, Ford's performance declined all the way and was on the verge of bankruptcy. Until Ford II came to power and activated the "Blue Blood Ten Jie", the crisis was turned into safety. The whole process lasted 19 years and lost $1 billion.
Sixth, the story of Toyota
In terms of the choice of strategic form, it is worth mentioning Toyota. Many people mistakenly believe that Toyota's success lies in the production method and product business model, but do not know that the secret of Toyota's success is the business model - a business model built on the basis of production methods. Yoshio Ishizaka's "Toyota Sales Method" can support this.
According to Drucker, production is only a cost, and even the most efficient production is only a cost. Few people know that Toyota nearly went bankrupt in the process of building a product business model and production methods, and it was ultimately the help of the Mitsui Consortium that brought Toyota out of the predicament.
In 1930, Kiichiro Toyoda accepted a family mission and began developing cars.
In 1937, Toyota Motor Corporation was officially established.
Kiichiro Toyoda's brilliance is not to build a product or create a blockbuster, but to run a car business, or to say, to produce cars as a business. This is a kind of corporate strategic thinking.
The first thing he had to figure out was, how did Ford run its cars? What is Ford's business model? There is no doubt that Ford has chosen a product business model.
Kiichiro's eyes are greeted by a huge factory with 80,000 workers, all South American immigrants, with little education, no family craftsmanship, and pure manual laborers.
In this factory, there are rubber forests, steel mills, iron works, coking plants, waterworks and power plants, as well as production plants and assembly plants for various spare parts.
The factories are connected and linked with various devices, rolling forward like a river, continuously, and freed from a huge machine that produces cars, which can produce 6,000 cars a day, each selling for $200.
Just looking at such a factory is enough to scare people stupid. Kiichiro knew very well that he could not copy Ford's model. Rome was not built in a day, and Ford has been operating for 40 years, like a snowball, gradually accumulating, gradually improving, and gradually growing in a virtuous circle.
What Kiichiro wants to figure out is, what is the logic of this product business cycle? Is there a flaw in the logic of this cycle? That is to say, he must figure out the paradigm behind the product business model, figure out the paradigm of product management, and thus establish his own product management paradigm, that is, the logic of winning or the reason for winning.
Ford's product management paradigm is: larger scale, larger batch size, longer cycle, more capital occupation, lower cost, lower selling price, until the market monopoly.
Kiichiro is well aware that this paradigm applies only if mature products and immature markets, coupled with a first-mover advantage, quickly gain a monopoly position in the market.
However, the automobile mass consumer market has matured, and these conditions and first-mover advantages have changed over time and no longer exist. Moreover, Ford's model of single-variety production sales and epitaxial expansion will eventually trigger a reversal of supply and demand.
Poor is thinking about change, Kiichiro finally found a way out in Ford's product management paradigm, which is smaller scale, smaller batch, shorter cycle, less capital occupation, lower cost, lower selling price, the key point is "punctuality".
It can be said that Toyota was built on its own strengths from the beginning, which is the concept of punctuality. This concept or advantage is directly tied to the product management paradigm, which can effectively balance the relationship between "developing enterprises, achieving customers, and surpassing opponents".
It can be seen that the strengths are not necessarily core technologies, but also an innovative concept.
Kiichiro is well aware that this is a unique concept that is a first. People don't know the concept yet, and they don't believe it. This has won time and space for enterprises to cultivate a unique product business model.
Incredibly, Toyota's 0-1 gestation period was too long, from 1937 to 1949, not only was the just-in-time production method not cultivated, but the company was on the verge of bankruptcy. In 1950, the Mitsui Foundation helped Toyota reorganize and establish Toyota Motor Sales Company, which opened Toyota's business model.
In 1952, Kiichiro died of a sudden heart attack at the age of 57, not seeing the punctual system become a reality. His life credo was: "Endure a thousand hardships and forge things to be complete." He was a true entrepreneur who endured the unbearable things in the world.
7. Business model
In 1950, the Mitsui Foundation came forward to reorganize Toyota Corporation and set up Toyota Motor Sales Corporation, with Shotaro Kamiya as president, responsible for opening up all aspects of circulation channels and terminal retail, and gradually building a relationship system between Toyota and dealers, retailers and consumers.
The original Toyota Corporation was changed to Toyota Motor Manufacturing Corporation, with Ishida as president, responsible for building a supply chain system, namely Toyota Castle in Nagoya, and a product development system.
Toyota relies on two companies of manufacturing and sales, also known as the two systems of production and sales, to organize the relevant stakeholders in the industrial value chain and form a strong supply and demand integration relationship system, which is the so-called business model. This relationship system of integrated supply and demand operation goes beyond the scope of product management, transforms the relationship between products into a relationship between people, and transforms stakeholders into community members. In this way, we can counter the uncertainty of the competitive environment and effectively maintain a virtuous cycle of reproduction.
Drucker emphasized the inherent unity of the enterprise, or unified in technology, or unified in the market. In Porter, an integration strategy based on the industrial value chain is emphasized, either backward integration or forward integration.
Judging from Toyota's practice, the views of the two masters are not accurate, and they do not recognize the need to rely on the form of strategy and the business model to maintain a virtuous circle of enterprise reproduction.
The inherent unity of the enterprise, and the integration of forward and backward directions, are only means that are not ends. At least integration is not about roaming the industrial value chain in search of possible business opportunities. Toyota's goal is clear, to turn stakeholders in the industrial value chain into members of the community.
The most basic purpose of the unity of technology and backward integration is to obtain or control the core technology and seek to take root in the technology, which is the guarantee for the reproduction of enterprises.
Huawei's thinking is strategic concentration, strategic focus, and strategic breakthrough to peek into the secrets of the "Creator", hear the footsteps of "God", and seek technological roots.
The most basic purpose of market unity and forward integration is to obtain and control the market and seek to take root in the market, which is also the key to maintaining a virtuous cycle of enterprise reproduction.
The key step from the product business model to the business model of the enterprise is to separate production and marketing, and the production and manufacturing system and the sales system are separated.
This is a decision made by Shotaro Kamiya, the purpose is to make manufacturers form an alliance, forming a value chain ranking: customer first, sales second, production third; the industrial value chain is reversed, unified in the market, unified in the customer. Naturally, the sales company is no longer the salesman of the manufacturing company, but the buyer of the consumer and the distributor.
The alliance of manufacturers is also a necessary premise of the just-in-time production method, otherwise the inventory of each link cannot be controlled, let alone zero inventory.
Most importantly, it has formed a unity within the enterprise and unified with the customer. In this way, the customer principle is established, and every link in the industrial value chain must contribute to the customer, including every link in the production process. The so-called next process is the customer.
The essential difference between the product business model and the business model is that the former focuses on the relationship between "product-demand", while the latter focuses on the relationship between "enterprise-customer" and the relationship between the people behind the product.
After Shotaro Kamiya became the president of the sales company, he was not busy with the sales of products or the improvement of product sales revenue, but devoted resources and energy to the establishment of relevant stakeholder relationships.
Specific strategic initiatives were the purchase of the Tachikawa Automobile School in Tokyo in 1954 to train Toyota's sales and maintenance personnel; in 1955, to fund the establishment of toyota used car sales company; and in 1957 to establish Asia's largest Chubu Automobile School.
In addition, it invests in international highways, broadcasters, film companies, insurance companies, survey centers, design centers, etc., to develop and target institutional users and ordinary consumers. It can be said that the business model of the enterprise is to operate customers and manage relevant stakeholders.
Viii. Sears' Story
It is difficult for industrial manufacturing enterprises to get rid of the logic of the production and sales of their own products, and it is difficult to think from the perspective of consumers. This is especially true in the pursuit of economies of scale.
Only Toyota, under the leadership of Shotaro Kamiya, dared to make such a determination to take the road of separation of production and marketing and alliance of manufacturers to build a business model.
It seems that it is easier for merchants to get rid of the thinking of product buying and selling, reverse the industrial value chain, stand on the position of consumer lifestyle, and become a buyer of consumer lifestyle.
As early as 1895, Sears' leader Rosenwald knew how to connect businesses with customers and build the ability to contribute to the value of the business according to the farmer's lifestyle.
Rosenwald ran Sears for a decade, dealing with farmers and their lifestyles rather than channels and commodities.
Unlike founder Richard Sears, the mail-order business peddled watches, bracelets, hands, jewelry, and diamonds everywhere, eventually leaving the business unable to operate stably and on the verge of bankruptcy.
Rosenwald chose farmers who were far away from the city as their customers, as the object of mail sales and mail order business services, and formed a series of functional teams to contribute to the lifestyle of farmers for a long time, including market research team, commodity catalog research team, procurement team, packaging restructuring team, warehousing and transportation team, and so on.
In the minds of farmers, Sears is not a channel provider, but a helper of daily life, a brand of daily life. Whenever they're in trouble, or when they have a need, they think of Sears, of Sears' mail-order catalog.
Sears' mail-order catalogue covers the many supplies that farmers live and produce, from agricultural machinery parts to clothing, shoes and hats, from tables, chairs, benches to pots and pans.
In 1900, Sears' annual turnover was only $1.1 million. But ten years later, in 1910, it was $61 million. Twenty years later, in 1920, it was $245 million. 70 years later, billions of dollars.
These data show that building a model and developing operations is the fundamental choice of an enterprise and the strategic choice of an enterprise. This choice determines whether a company is the operator of a business or the buyer and seller of goods. Strategy is not a strategy and a strategy, let alone a strategy and strategy to make money.
9. Industrial business model
The Mitsui Foundation is the organizer of the industrial value chain ecological network, which builds and engages in an industrial business model.
The Mitsui Foundation, formerly known as the Mitsui Chaebol, was founded in 1673 and has a history of more than 300 years. It is said that the business name Mitsui has a much older history and is related to the villages of Mitsui and Mitsui in Tiantai Mountain, Zhejiang.
In the Tang Dynasty, it was a place where the three religions of Buddhism, Taoism and Confucianism were integrated, and a group of ancestors of the Mitsui family lived. After they returned to Japan, they did not forget that their ancestors were from the village of Mitsui in Zhejiang. The predecessor of Mitsukoshi Department Store was Mitsui Echigoya, which can prove this.
After World War II, the Japanese government established an industrial policy in which technology was established and both ends were outside, that is, raw materials and markets were both outside. Japan's major general trading companies, including the Mitsui Foundation, help Japanese small and medium-sized enterprises to enter overseas international markets, and naturally they become organizers of the industrial value chain.
The Mitsui Consortium uses this opportunity to access scarce and strategic resources such as technology, processes, talent, energy, minerals, intelligence, knowledge, and capital.
This is not only a necessary resource for the reproduction cycle of enterprises, but also a source of external domination and influence, and the power to integrate the industrial value chain.
The implementation of the specific strategy is completed through its Mitsui & Co., Ltd., including the construction of an industrial business model, the creation of a network ecology of the industrial value chain, and the maintenance of the reproduction cycle of the industrial value chain.
Mitsui & Co., Ltd. once integrated Toyota, Toshiba, Sony, Sumitomo Mitsui Banking Corporation, Merchant Marine Mitsui, Mitsui Shipbuilding, Ishikawajima Harima Heavy Industries, Mitsukoshi Department Store, and so on.
In 1992, Mitsui & Co. signed a comprehensive cooperation agreement with Baosteel to infiltrate Baosteel in the name of regular cadre exchanges and various thematic business exchanges, including participation in general manager meetings, exchange of cadres, sharing of intelligence, and so on.
Mitsui & Co., Ltd. integrates the value chain through cooperation, joint venture, and merger. Cooperation is the infiltration of ideas, joint venture is the establishment of operating entities, and merger is integrated operation.
In 1993, Baosteel established Baohe Commerce for 90 million yen, mainly engaged in the import of steel production equipment, parts and components, as well as the export of steel, and became an agent for Japan to import containers from China. In fact, this is the commercial enterprise that Mitsui & Co. helped Baosteel establish.
In 1994, Mitsui & Co., Ltd., Baosteel Group, Baoshan Yuepu Town Industrial Company, and Italian Secco Complete Consulting Engineering Company jointly built Shanghai Itema Color Coated Steel Products Co., Ltd. The total investment is US$9.52 million, accounting for 57% of Baosteel's investment.
In 1995, Mitsui & Co., Nippon Steel, Baosteel Group and Nantong Investment Management Center established a joint venture to establish Nantong Baoxin, which produces various engineering construction profiles with a total investment of 1.3 billion yuan, and Baosteel accounts for 67.5% of the shares.
In 1996, Baosteel Group, Baohe Commerce & Commerce, Hong Kong Mingzhou Development Co., Ltd., and Zhejiang Yong Iron and Steel Investment Co., Ltd. jointly funded the establishment of Ningbo Baoyong Special Steel Cold Rolled Plate Co., Ltd.
In 1998, it was renamed as Ningbo Baoxin Stainless Steel Co., Ltd., with five shareholders: Mitsui & Co., Nissin Steel, Hanwa Industrial, Baosteel Group, and Zhejiang Yong Iron and Steel Investment. Baosteel holds a 54% stake. Production of cold-rolled stainless steel sheets. The total investment is 7.35 billion yuan, and the annual output is planned to be 600,000 tons.
After 1998, the industrial chain ecology and industrial operation mode built by Mitsui & Co., Ltd. surfaced, which is a series of Baojing Steel Processing and Distribution Co., Ltd. covering China, including Hangzhou Baojing, Shanghai Baojing, Wuxi Baojing, Qingdao Baojing, Fuzhou Baojing, Yantai Baojing, Tianjin Baojing, etc., providing product and distribution services for users in the industries of home appliances, light industry, automobiles and office equipment, especially Toyota Motor. The annual production and sales of stainless steel sheets for automobiles alone reach 1.5 million tons.
The process is not over, and Mitsui & Co. continues to work with Baosteel to extend the industrial value chain and acquire mineral resources on a global scale to maintain the reproduction cycle.
Author — Bao Zheng, founder of BaoZitang, professor and doctoral supervisor of management at Renmin University, EMBA Chair Professor of Marketing at Tsinghua University
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