Image source @ Visual China
Wen | Mu Sheng
In the science fiction novel "Three-Body Problem", the protagonist Luo Ji uses the law of the dark forest to threaten the Three-Body Civilization and save the earth. Then, under this deterrence, the soaring Trisolaran civilization trembled and enjoyed peace, which is also known as the "Era of Deterrence".
The Internet giants took the lead in mastering the survival code of the new era, and once reconstructed the commercial society in the form of a three-body civilization wind and cloud attack, becoming the protagonist of the times. After only a few years, they encountered challenges in many aspects and quickly entered the "era of deterrence". Today, they are as trembling as the Trisolaran civilization of the time.
In the era of the Internet and digitalization, the saying "enterprise performance = strategic × organizational capabilities" may no longer apply, and "enterprise performance = business model× organizational model" is the law. The business model is the coordinates of the strategy, but also jumps out of the strategy, thinking about the "moat" and "financial model" problems at the bottom; and the organizational model is the reason for the level of organizational ability, but also jumps out of the traditional management, thinking about how to structure the governance structure, so that employees have the same responsibilities and rights as entrepreneurs, so that everyone is their own CEO.
Unfortunately, in both aspects, Internet manufacturers are facing bottlenecks. In the era of deterrence, they faced some internal and external conditions that could not be shaken, and did not dare to use the original simple and rough way of playing rashly, but had to find another way.
Behind these entanglements is actually the conflict between the business philosophy of the entrepreneurs who run the internet and the needs of this era.
01, the business model of the coveted
In 2016, the Internet factory has unlimited scenery. The Protagonist's halo of the Us group Wang Xing put forward the argument of "the second half of the Internet". He believes: "From the Internet to 'Internet +', it means the end of one era and the arrival of another era. Since the beginning of this argument, more and more Internet players have realized the disappearance of the traffic dividend and begun to look for other ways to grow.
In Wang Xing's eyes, there are three ways to grow: one is "heaven", that is, the development of high technology; the other is "entering the ground", that is, deep penetration into the industry to serve B-end users; and the third is "globalization", that is, the expansion of successful business models in China to the world. These three roads have exhausted almost all the possible options of Internet companies.
Although "heaven" is put in the first place, all the Internet manufacturers that are under the influence of capital obviously need to do more certain business. "Entering the land" and "globalization" are choices that do not need to be hesitated. As a result, the big factories are racing in China, crazy mergers and acquisitions in the world, and the trend of destroying the decay is staggering. Among the two, "entering the ground" is particularly important, and the Internet giants all focus on the industrial Internet and believe that this is a larger world than the consumer Internet.
However, this momentum soon encountered two mountains: "entering the land" encountered anti-monopoly regulations; "globalization" suddenly encountered a sudden international situation, coupled with the epidemic also made the world fragmented, which directly made some companies simply change course, and even shouted out the slogan of "treating China as the world".
When these two roads are blocked, the Internet manufacturers began to focus on the "heavens", but scientific and technological innovation is bound to be a long-term choice, not only a huge investment, but also a matter of uncertainty, how easy is it to make achievements? In the past, many Internet manufacturers claimed to be embracing black technology, but after the tide passed, they quickly left naked swimmers. At the very least, the black tech they embrace will neither be able to hold back the declining market value nor maintain the high level of profitability of the past.
The embarrassment now is that although everyone generally believes that the traffic dividend has disappeared, the Internet manufacturers are still relying on the traffic dividend. This traffic dividend is not an "incremental dividend", but a "stock dividend" that users retain on various platforms. With the fierce competition, the inner volume of the market is becoming more and more serious, and the stock dividend is also disappearing. The data shows that the cost of a single customer of the three major e-commerce companies has risen rapidly, and even if the trend is the best in JD.com, the cost of a single customer is still at a high level (Figure 1).
Ali, Pinduoduo, Jingdong single customer cost analysis Source @ Ali & Pinduoduo & JD Finance Report, Musheng Consulting
Remarks: In the general caliber, the cost of customer acquisition = marketing expenses / (the number of active users in the current year - the number of active users in the previous year), but we believe that the expenditure of marketing expenses should also have the effect of maintaining old users. Therefore, in accordance with the industry's default "customer acquisition cost = 5 times maintenance cost" law, the marketing expenses were split, and a more reference value of the "single customer cost" caliber was obtained.
As a result, waves of uncertainty continue to test the mentality of big manufacturers. Their pockets are still lucrative (not necessarily lucrative), but they can only tremble and tremble, and the downward trend of any business data growth rate seems particularly glaring.
The three major e-commerce companies, every family has a difficult to think of: Ali's revenue growth rate is good, but GMV is almost stagnant is a sore point; Jingdong GMV growth rate is better, but the revenue growth rate is thrown away by Ali, especially they are still self-operated model; Pinduoduo's revenue and GMV are still growing at a high speed, but the growth rate has dropped twice... (Figure 2)
Figure 2: Revenue growth rate of Alibaba, JD.com, and Pinduoduo Source @ Alibaba & Pinduoduo & JD.com Financial Report, Musheng Consulting
Alibaba, JD.com, Pinduoduo GMV growth rate Source @ Ali & Pinduoduo & JD Finance Report, Musheng Consulting
It is best to trace back to the source and use business models such as e-commerce to illustrate the root cause of anxiety of big manufacturers. E-commerce in the era of consumer Internet uses the Internet to attract users and merchants at both ends of supply and demand to go online and match commodity transactions. The profit margin of this business model comes from two places: one is low-cost traffic, and the other is low-priced products. In the past, dividends at both ends were: on the one hand, in the first few years before the commercial society began to connect to the network, the traffic dividend was very obvious; on the other hand, a large amount of surplus production capacity of Chinese enterprises also provided product dividends.
However, when the cost of traffic rises sharply, in order for e-commerce to remain profitable, it can only lower the price of the product, once below the normal cost line, it is a fake. This path is clearly unlikely to last. In fact, external deterrence is not the real problem of Internet giants. Because, in this uncertain era, there is no such deterrence, there is also that deterrence, and the business model is not firmly rooted, which is the crux of the problem.
Remember that after Wang Xing's "second half of the Internet" argument was put forward, Ali's Wang Jian had another statement: "The first half and second half of the Internet that we talk about today are actually the second half of China's Internet companies entering the second half in the past twenty years, not the Internet entering the second half." In his eyes, although Internet companies create various kinds of value, their commercial value depends on advertising (or the "spread" space based on matching transactions), and they will naturally worry about the "second half".
Internet giants are not without problems, they are also trying to jump out to find new business models: on the one hand, they go deep into users and understand personalized needs; on the other hand, they go deep into the industry, link various participants in the ecosystem, and provide in-depth solutions. And this new business model is the industrial Internet. To put it bluntly, it is to let the industry realize digitalization, and then use digital technology (DT) to improve the efficiency of the industry, the former is the inevitability of "entering the ground", and the latter is a choice of "heaven".
The industrial Internet, which seems to be a new continent, is actually not easy to reach. This is not a problem from to C to B, nor is it a problem from selling products to the C-end to providing solutions to the B-side, but to let a business ecology migrate from offline to online, and then reconstruct the relationship between its species to improve ecological efficiency as a whole.
The bigger deterrent is that they can only choose this path in a real value-creating way. Because, in the past, the way of relying on capital to do it quickly and spend money to make a platform obviously undermined a certain balance of China's commercial society, and at any time it will encounter the anti-monopoly Sword of Damocles (such as Table 1).
The road after the Internet factory is not so easy to go.
Table 1: Anti-monopoly regulations encountered by Internet head enterprises
Source @ State Administration for Market Regulation official website, Musheng Consulting
02, the difficulty of the organizational model
Even if the business model of the past is still hot, the problem of the organizational model of the Internet giants has begun to surface.
Bureaucracy, rigidity, jianghu, paddling... These labels, which seem to be the exclusive domain of traditional enterprises, have also been hit by Internet manufacturers. And some other feature tags are even more lamentable, such as algorithm ruthlessness, disrespect for human nature, employee social animalization...
In the past, some of the so-called "organizational innovations" of Internet manufacturers were once considered to be new benchmarks. But in the past two years, public opinion has begun to take a sharp turn. There are extreme arguments that even believe that the "superpower" of the organization flaunted by the Internet manufacturer is actually the strategic vision of the boss + the "banknote ability" of the capital.
Let's not talk about "organizational innovation" and return to the most basic "organizational management". What is the organizational management level of Internet enterprises? In fact, under the package of excellent performance in the past, this is a difficult problem to verify.
In the stage of the rapid development of these enterprises, a simple option or equity incentive can allow employees to share the dividends of enterprise growth, create a number of wealth creation myths, and make latecomers fascinated and obey the authority of the enterprise. Coupled with a bit of a value slogan, the team looks absolutely energetic. The rationality of organizational management design such as grade system, performance appraisal, and empowerment mechanism? inexistent. To put it bluntly, almost all the mistakes in organizational construction can be solved with money.
But if the profits of such companies begin to decline, the above logic clearly no longer holds. As a result, a large number of organizational problems began to erupt in a concentrated manner. At this time, like the weak business model after the tide recedes, the problem of the organizational model is also quite glaring.
It is not difficult to find that not to mention organizational innovation, is the basic skill of some organizational management, such enterprises seem to be very problematic. They are not much different from traditional enterprises in terms of the rationality of organizational structure, the accuracy of incentive mechanisms, and the efficiency level of empowerment mechanisms. And the department walls, insulation layers, process barrels, and vacuum covers within these organizations are also not many. A simple example is that if the incentives of the Internet factories are so accurate, there is no need to use the primary method of working hours measurement to send money, and it will not be criticized as turning employees into "social animals" that sell their time.
The reality is that some Internet giants have adopted an anti-intellectualist "de-management", coupled with romantic propaganda slogans and a sense of gamification ritual, creating an illusion of organizational model innovation. They did not solve the inherent problems of traditional pyramid organizations, but only temporarily "bypassed the past", but convinced themselves and the public that they were "stepping over the past". Sometimes, they even create more "bigger problems that sink under the surface of the water" when they avoid problems, which can erupt at any time.
Data does not lie, and the human effectiveness index is the best endorsement of organizational ability and the key indicator to verify the quality of organizational model. Here, we may wish to consider a human efficiency indicator defined by Musheng Consulting - marginal operating performance (in terms of people), simply put, that is, how much GMV/revenue can be brought by each additional person. The specific formula is as follows:
It can be said that compared with the traditional human efficiency indicator, this indicator more sensitively indicates the change trend of human efficiency, and the relationship between human efficiency and financial efficiency is in the same direction, which obviously strongly indicates the future financial performance of enterprises. As shown in Figure 3, the marginal operating performance (human caliber) curves of Tencent and Ali have shown a downward trend, and they are below the per capita GMV or per capita revenue curve, which has dragged down the trend of human efficiency.
a. Alibaba
b. Tencent
Alibaba and Tencent Marginal Operating Performance (Human Caliber) and Human Efficiency Trends (2016-2020) Source @ Alibaba & Tencent Financial Report, Musheng Consulting
The reality that big factories need to face is that if they want to move towards the industrial Internet, they not only need to make up for the arrears of organizational management, but also embrace the innovation of organizational models, which cannot be bypassed.
Still take the e-commerce business model mentioned earlier as an example. The business model of the original e-commerce only provided online shelves and matched commodity transactions. Therefore, in terms of organizational model, the traditional pyramid organization is enough, the four major lines of market, operation, product, and technology have a clear division of labor, and the organizational efficiency must not be bad.
But then, user needs began to be personalized, they not only want to buy the right goods online, but also need accurate product push, appetite for people to bring goods, rapid logistics delivery, inclusive financial support... At this time, various departments within the enterprise, and even external ecological partners, must cooperate efficiently.
This kind of collaboration can only be achieved through a platform-based organization:
The first is to form a "three-station structure" in the organizational structure, around the user as the center, the front desk pulls the middle platform, the middle platform pulls the backstage, and lets the people who can hear the artillery fire to direct the artillery fire;
The second is to form a "market-oriented incentive" in the incentive mechanism, accurately measure the market-oriented contribution of each business unit or even an individual, and let everyone be their own CEO;
The third is to form a "knowledge flow empowerment" on the empowerment mechanism, so that all kinds of knowledge of the enterprise can be efficiently precipitated and quickly and accurately pushed to the people in the combat scene.
Organizational problems are hard work, and the big factories that are accustomed to "cutting a short path" can they? In addition, organizational transformation is to reconstruct the responsibility and power of energy, and the big factories have grown to the current scale, can they really move the knife? Who dares, except the boss? The boss must dare, can he?
03, the real deterrence of the era of deterrence
In fact, the deterrence of business models or organizational models has never been a real deterrent, and the interweaving of the two is. In fact, there are ways to solve any problem, but the difficulty is that the two problems erupt together. The dilemma of reality is that when the business model dividend is no longer there, facing a bottleneck, it can only go to a new track; and the new track can only be supported by organizational model innovation, but organizational innovation is difficult.
Deeply investigated, the real deterrence is not only the interweaving of business models and organizational models, but also comes from the hearts of the leaders of big factories, which is the conflict between their business philosophy and the needs of the times.
Objectively speaking, in the face of the large number of virgin lands in the Internet era, it must be "anti-human" for them to be steady and long-term; in the face of occupied land (users, ecological collaborators, etc.), if they do not monopolize or harvest, they must also be "anti-human".
This is a "question of finite games versus infinite games" posed by James Cass, a professor in the Department of Religious History at New York University. He believes that there are two types of games in the world:
Limited games, the purpose is to win; infinite games, but the purpose is to make the game last forever. A limited game has a definite beginning and end, has a specific winner, and rules exist to guarantee that the game will end. While the infinite game has neither a definite beginning nor an end, nor a winner, its purpose is to bring more people into the game itself, thus continuing the game.
In the "Three-Body" novel, the three-body civilization relies on the technology of ascending dimensions, and other civilizations in the universe rely on the two-way foil of reduced dimensions to establish their hegemony. But this short-term-oriented business philosophy, in fact, has endless disasters, resulting in a series of subsequent lose-loses, and even led to the collapse of the entire universe.
Back in the Internet business world, I sincerely hope that "big entrepreneurs" can use their own patterns to suppress the low-level humanity of short-term utilitarianism and turn their own business ecology into unlimited games.
As Professor Cass puts it, "The finite player plays within the boundary; the infinite player plays with the boundary." ”