Song Zhiping, President of the China Association of Listed Companies and Chief Expert of the China Enterprise Reform and Development Research Association
Author: Yu Bingjun, President of CPMC Holding Group, author of the book "Doing Results".
Source: President's Reading Club (ID: winnerbook_club), this article is the author's reading of Song Zhiping's "Steady Operation" at the 8th Chinese Business Leaders Reading Ceremony on April 23
A good book can affect a person's life
Today coincides with World Book Day, and on this special occasion, it is a great honor to read the new book "Steady Management" published by Mr. Song (Song Zhiping) in 2024.
Song is a well-known management expert in mainland China, the president of the China Association of Listed Companies, and has served as the chairman of two listed companies, China National Building Materials Group and China National Pharmaceutical Group.
A good book can impact a person's life, and a management expert can make a group of entrepreneurs with big dreams. Mr. Song is not the same as the general chairman of the world's top 500, he has been deeply involved in the enterprise for 40 years, and has been fighting at the forefront of enterprise reform and innovation for a long time, leading China National Building Materials Group and China Pharmaceutical Group from small to great, and promoting the two companies to rank among the world's top 500 companies with innovative transformation and integrated development, so he is also known as the "double" chairman.
After becoming famous, he could have enjoyed his retirement, but Mr. Song still chose to embark on a new journey. This time, he is an integrated "evangelist", from an athlete to a coach, committed to promoting the innovation and development of Chinese enterprises, accompanying more Chinese listed companies to become world-class enterprises, and incubating specialized and new small giant enterprises to become invisible champions.
In my opinion, Song is always a reader, a writer, a teacher, and a doer. Mr. Song's book was not written, but was made after more than 40 years of corporate practice. "Steady Management" is such a book that is not only based on lofty goals, but also takes root. In the book, in view of the key points, pain points and difficulties faced by the enterprise, Mr. Song stands at the commanding heights of enterprise management, with the mind, pattern and vision of a leader, combined with his own 40 years of practical experience in running an enterprise, and provides a unique business idea and plan for the enterprise.
On October 19, 2020, I participated in a two-day course on "Business Strategy" by Mr. Song in Shanghai, and I still remember that Mr. Song recommended the book "My Experience and Lessons" by Schwarzman, chairman of Blackstone Group. The book says that the difficulty of doing big things is the same as doing small things, and that you should choose an ambitious goal that is worth pursuing, and that the rewards will match your efforts.
As a new generation of entrepreneurial entrepreneurs born in the 90s, I keep in mind the words of Professor Song: a leader is a strategist, a manager is a tactician, a leader is a person who looks into the distance, and the primary responsibility is to formulate a strategy, strategy is the top priority of an enterprise, any great enterprise must go through at least 30 years of growth tempering, and entrepreneurs must adhere to the dream of becoming stronger, better and bigger, and adhere to long-termism......
Starting a business is a very difficult job, and business leaders face a variety of different challenges and difficulties. Changes in the international situation, shrinking demand, supply shocks, and weakening expectations have all put great pressure on our business operations. In such an uncertain era, I believe that many entrepreneurs, like me today, are in the stage of confused choice. Is it rapid development and expansion? Or is it conservative and wait-and-see? The most fearful thing about being a business is missing opportunities, but what is even more terrible is making the wrong decision. Where do we go from here?
In April this year, I received the book "Steady Management" from Mr. Liu Shiying of the President's Reading Club. In the book, Mr. Song said that steady operation is the concrete embodiment of seeking progress in stability and promoting stability in the enterprise, stability is the foundation, and then winning first, progress is the goal, only firm forward can be stable for a long time, and the enterprise must have a normal heart and an enterprising spirit. This not only answers the questions that have plagued me over the years, but also points out the direction for me in the future of business operations.
As the preface of the book reads, in the previous era of extensive and high-speed growth, it was easier to earn some hot money, fast money, and big money. In the current period of high-quality development, enterprises must strengthen scientific and technological innovation, operation and management must be refined, and enterprises must rely on technological innovation and intensive operation to make money. In the operation and management of enterprises, it is necessary to transform from the so-called leapfrog development in the past to steady innovation and development. This is the purpose and significance of the book "Steady Management".
The core idea of "sound operation".
The book "Steady Operation" comprehensively reflects what Mr. Song has seen, heard, thought and thought about how Chinese enterprises operate steadily in the past three years from epidemic prevention and control to the transition of the epidemic, from the triple pressure of the economy to the difficult recovery of the economy, and from overcoming difficulties to high-quality development, forming a new ideological achievement of Mr. Song's steady operation to promote high-quality development. This is also another new endeavor for Mr. Song to practice the new goal of "publishing two books a year before the age of 70".
The book contains five chapters: the power of capital, enterprise reform, from management to operation, high-quality development, innovation and entrepreneurship, and each chapter has 10 selected articles for in-depth analysis. In the book, Mr. Song used scientific and systematic thinking on enterprise management, and conducted in-depth thinking and exploration on the issue of sound management, which will surely have an important impact on the use of enterprise management thinking in China's business circles and do a good job in sound operation.
This is a must-read book for entrepreneurs. For me, "Sound Management" is a book that can influence the future and even change my fate, which is my personal feeling after reading this book. From the world pattern, the national pattern, to the entrepreneurial pattern and entrepreneurial spirit, all of them touched my heartstrings.
In the order of this book, I will share the core ideas that I have summarized and extracted in this book, the value and significance of this book, and the gains and influences it has given me.
Chapter 1 The Power of Capital
The chapter on the power of capital touched and helped me a lot, and made me re-understand the significance of the capital market.
China's capital market has only developed for more than 30 years, from scratch, from small to large, from weak to strong, and we have walked the road that developed countries have walked for hundreds of years in more than 30 years. Among the world's top 500 companies in 2020, 124 companies from mainland China are on the list, surpassing the United States in terms of number, ranking first. These 100-billion-level companies have three characteristics: first, they are in the track of high-tech, new economy, and innovation, such as new energy and biopharmaceuticals; second, they are leading enterprises in leading or subdivided fields; and third, they are enterprises with relatively stable governance structures.
The rapid development of the mainland's capital market is mainly due to the promotion of marketization, legalization, and internationalization. From the establishment of the STAR Market in July 2019 to December 31, 2020, a total of 215 companies were listed on the STAR Market, and in 2020, 396 new A-share companies were listed, including 145 on the STAR Market. This shows that the funds raised from the capital market can be used to support scientific and technological innovation undertakings. Now the capital market has begun to support specialized, special and new small and medium-sized enterprises.
The key thinking for me in this chapter is that for small and medium-sized enterprises, we should extract the essence from the book, and the capital market's support for science and technology enterprises and the key support for specialized, special and new small and medium-sized enterprises are effective tools for us to cross the cycle and grow rapidly. The top leaders of enterprises should do three things well: looking for money, finding people, and finding resources, and "looking for money" requires a deep understanding of the capital market and good use of capital leverage.
Chapter 2 Enterprise Reform
The chapter on enterprise reform clearly points out that the mainland economy has shifted from a stage of rapid growth to a stage of high-quality development. In this chapter, I mainly learned and felt the following.
First, on building a world-class enterprise. The central government put forward 4 sentences and 16 words: excellent products, outstanding brands, leading innovation, and modern governance. In the book, Mr. Song summarized and refined five capabilities, namely, the ability of scientific and technological innovation, the ability of value creation, the ability of corporate governance, the ability of resource integration, and the ability of brand guidance.
Second, on the core competitiveness of enterprises. The book particularly emphasizes that there are no backward industries, only backward technologies and backward enterprises. In the case of economic downturn, in industries with excess competitive incentives, enterprises can create new competitive advantages through market segmentation. Enterprises should focus on the main responsibility and main business to enhance the core competitiveness, the company's human, financial and energy capabilities are limited, and the success of most enterprises is based on professional management. The business of the enterprise should not be too much, it should focus on the main business, the industrial chain should not be too long, and the main business should be deeply cultivated. The operation should be more stable, focus on the core business, core expertise, core market, and core customers to enhance the core competitiveness, and build an industry leader. Enterprises are the main body of market competition, and the vitality of enterprises is their core competitiveness.
Mr. Song gave a definition of core competitiveness: core competitiveness is the unique ability of an enterprise formed through the creative combination of resources of entrepreneurs and the ability to continuously bring competitive advantages to the enterprise. The book also gives our readers and friends four effective methodologies on how to form the core competitiveness of enterprises, you may wish to go to the book to find the competitive advantage that meets your business.
Third, risk prevention and control. This has been very helpful and touching to me about enhancing my ability to prevent and control risks. Regardless of the size of the enterprise, in the process of operation, it will inevitably encounter various risks, the basis of the stability of the enterprise is financial stability, and the core of financial stability is abundant cash flow; entrepreneurs should pay attention to the cash flow of business activities, the pursuit of profitable income, cash flow profits.
Fourth, on common prosperity, sharing enterprises and sharing mechanisms. The book argues that from a global perspective, the polarization of wealth is more severe. According to the 2021 Global Wealth Report released by Credit Suisse, by the end of 2020, the world's richest 10% of the world's wealth owned 82% of the world's wealth, of which the richest 1% owned 45% of the wealth, while the bottom 50% of the world's wealth owned less than 1% of the wealth. That's the problem we face today.
Common prosperity is the essential requirement of socialism and the common ideal of mankind. If we want to create a shared society today, it is very important to put human capital into the distribution.
Sharing enterprises are the cornerstone of achieving common prosperity. Businesses play an important role in the entire wealth creation process. In 2020, the revenue of mainland enterprises accounted for more than 90% of the total GDP. To this end, it is urgent to build an enterprise sharing mechanism.
Mr. Song believes that to do a good job in an enterprise, it depends on the "spirit + mechanism", and the enterprise must have both spiritual culture, mechanism, and material incentives, which is the root matter. Employees come to work in the enterprise and have certain material needs. How do we "divide the pie" and how do we make the "pie" bigger? "Dividing the pie" is a matter of mechanism, and with a good mechanism, the "pie" will become bigger, and after making the "pie" bigger, every "pie" will have a larger share of the owner, including the owner and employee, and this is the underlying logic.
Mr. Song expects that our entrepreneurs can have feelings, and at this moment we must deal with the problem of win-win and win-win, not only considering ourselves, but also taking into account the society and the majority of employees. In fact, sharing will be a better choice for every entrepreneur and every owner. The core of common prosperity is sharing, and in Chinese society, sharing can actually be implemented through the platform of enterprises.
Chapter 3 From Management to Management
In this chapter, Mr. Song's article "Three Fine Management - Hard Kung Fu for Enterprises" impressed me deeply. The core content of the three fine management can be summarized as the organization is refined, the management is refined, and the operation is lean. Each "refinement" of the "three essences" is followed by the "four transformations", and each "transformation" is followed by four methods, thus constituting the "three refinements, twelve transformations, and forty-eight laws". Sanjing management has a practical foundation, and it is a set of enterprise management methods that people in the industry can understand, learn, remember, and apply.
In recent years, Mr. Song has explained the "three fine management" to many enterprises in Peking University, Chinese Renmin University and other universities, and is deeply loved by business people. "Three fine management" is also what China National Building Materials Group has been practicing. Mr. Song particularly emphasized that not every enterprise should be in accordance with the specific practices of China Building Materials, as long as the management process adheres to the concept of "three fine management", according to their own needs and characteristics, perseverance, solid and steady implementation, can help enterprises to improve the level of management and comprehensive competitive advantage, to achieve new leapfrog development. To this end, I suggest that readers and friends focus on the relevant chapters of "Three Refined Management" when reading the book "Steady Management".
The three-fine management mind map created by Liu Yan's team was presented to Mr. Song
Here, I would like to share with you some legendary stories about Mr. Song.
In the past 40 years of his entrepreneurial career, Mr. Song has been a factory director for 10 years, the chairman of a central enterprise for 18 years, and has been engaged in the operation and management of enterprises for 35 years. In 2002, Mr. Song was appointed as the general manager of Zhongxin Group (later renamed China National Building Materials Group), when the annual sales revenue of Zhongxin Group was only 2 billion yuan, but the debt was 3 billion yuan. However, in 2011, in less than 10 years, Mr. Song led China National Building Materials Group to enter the ranks of the world's top 500.
From 2009 to 2014, Mr. Song served as the chairman of China National Building Materials Group and Sinopharm Group at the same time. During this five-year period, Sinopharm's revenue increased from more than 30 billion yuan to 250 billion yuan, and in 2013, Sinopharm also entered the ranks of the world's top 500. Because of this legendary story, Mr. Song also won the reputation of "Kazuo Inamori in China".
Mr. Song wrote in the book: I have been a leader of central enterprises for 18 years, if I want to tell the story of doing business, the five things about "strategic selection, resource integration, capital operation, integrated innovation, and mechanism innovation" are very important, and these five things are not the content of management, basically the content of management, are all about doing the right thing, this is my business practice.
As a reader and entrepreneur, what has benefited me the most in the book is the integration of resources in these five things.
When Mr. Song was operating China National Building Materials Group, he used a central enterprise with an annual revenue of more than 2 billion yuan and a debt of more than 3 billion yuan to achieve a leapfrog growth of 400 billion yuan in less than 20 years through resource integration. China National Building Materials Group started with the acquisition of cement enterprises, while the cement integration of China National Building Materials started in Zhejiang.
The "Wangzhuang talks" are a very classic case. At that time, Mr. Song set up a few small tea tables on a grass between the Wangzhuang Hotel and the lake by the West Lake in Hangzhou, and invited the leaders of the four major cement companies, namely Three Lions Group, Hushan Cement, Jianfeng Cement and Zhejiang Cement, to drink tea. Because of the price war, they didn't talk when they met, and every company found foreign aid. The chairman of Jianfeng Cement still has a plane ticket in his pocket, and he will go to Malaysia to sign a contract the next day. Mr. Song talked to them there for a whole day, convincing them to join forces with China National Building Materials. Mr. Song said to them: "The four of you have invited four 'mercenaries', and you still have to fight, and this battle is endless." In cooperation with China Building Materials, there will be no war, and the price will be restored, and the enterprise will be profitable. ”
Later, China National Building Materials Group continued to increase its integration efforts, so that the industry returned to healthy development, the cement price war stopped, saved many cement companies with difficult operations, and thus prompted China National Building Materials Group to become one of the world's top 500 enterprises in one fell swoop.
In the New Year of 2011, Mr. Song received a special New Year's gift from Harvard Business School: the successful experience of Southern Cement under China National Building Materials in joint restructuring and management integration was included in the management case of Harvard Business School. It is understood that after two and a half years of follow-up research, Harvard Business School in the United States has completed the case of "China National Building Materials Group Promotes the Development of China's Industry", and it has been included in one of the standardized textbooks of strategic management and general manager management courses of Harvard Business School.
After Mr. Song became the chairman of Sinopharm Group, it took only five years for Sinopharm Group's revenue to grow from more than 30 billion yuan to 250 billion yuan, which also relied on mergers and acquisitions to develop rapidly.
Whether the success of mergers and acquisitions depends on whether they can be integrated well, so if a business wants to grow rapidly and become bigger and stronger, resource integration is very important. This also directly affects the adjustment and layout of my next corporate strategic development, and gives me the guidance and firm belief to become bigger and stronger. M&A is a means to build a leading enterprise in the industry, which can achieve leapfrog development.
At the same time, the five keys to effective operators shared by Mr. Song in the book, namely correct selection, effective innovation, capital operation, resource integration, and sharing mechanism, also helped us answer the question of how to be an effective operator. As a business operator, I am especially grateful to have such an effective business manual for me to learn and practice, and not take detours and do things correctly on the road of leading the enterprise and team to overcome difficulties, manage development and entrepreneurship.
Chapter 4 High-quality development
Mr. Song mentioned digital transformation in this article, advocating that everyone should study digitalization and fully enter digitalization, which is the only way to go, and this is what enterprises must do in the future. What I learned a lot from this chapter was to cross the cycle and build new competitive advantages.
Combined with more than 40 years of experience in business management, Mr. Song has given us how to establish new advantages and a new competitive pattern. The book summarizes and refines six major advantages: continuous innovation to obtain technical advantages, comprehensive strategy to obtain competitive advantages, industry segmentation to obtain product advantages, high quality to obtain price advantages, dual circulation to obtain market advantages, and independent brands to obtain business advantages. Here, I suggest that readers and friends read, study, and read repeatedly, and deeply learn the six competitive advantages proposed by Mr. Song, which have far-reaching guiding significance and value for the sustainable development of our business enterprises.
Another inspiration that the book brought to me is that for small and medium-sized enterprises, if they want to become bigger and stronger quickly, they can study in depth how to become specialized and special new enterprises. This subsection reads and interprets the significance of developing specialized, special and new enterprises, as well as the characteristics of specialized and special new enterprises, and how to do the steps and key elements of specialized and special new enterprises. Mr. Song proposed that now is the best era to do specialization, refinement, and innovation, and hopes that everyone will seize this opportunity.
Chapter 5 Innovation and Entrepreneurship
In this chapter, Mr. Song deeply interpreted what innovation is, the role of innovation culture and capital, the mode of innovation and the soul of innovation. At the same time, it summarizes the five innovation modes commonly used by enterprises and effective in reality: independent innovation, integrated innovation, continuous innovation, disruptive innovation, and business model innovation. Entrepreneurs can carefully study and apply in the practice of running enterprises according to these five innovation models, so that enterprises can win healthy and sustainable development.
The book also focuses on the six major leadership skills that business leaders should build: learning, innovation, decision-making, influence, organization, and responsibility.
Over the years, I have been following in the footsteps of Mr. Song in the process of running a business and continue to learn from Mr. Song. Coincidentally, I spent three years writing a practical management book "Doing Results", which has also been published in the same period in 2024. I have refined my achievements and experiences in the past ten years into the four forces model, that is, cognition, strategy, learning, and influence, which is similar to Mr. Song's thoughts.
Reading Mr. Song's book "Steady Management" is like recalling my growth process. I have always believed that business development and business results are to do the right thing and do the right thing. Doing business is drudgery, being a leader is also drudgery, to have a sense of responsibility, responsibility and responsibility are very important, is the driving force for entrepreneurial development. At the same time, entrepreneurs are the soul of innovation, entrepreneurs should not only innovate, but also create wealth, and also have a sense of family and country, and actively repay the society.
People are born ordinary, and mission makes a person great
I would like to conclude with the last article in the book, "Have a good attitude, a good state, and build a good ecology", which is simply a sublimation of my soul.
The book "Steady Management" cured my anxiety about running a business, shaped a normal heart, enterprising spirit and empathy, and filled me with more expectations and confidence for the future.
I am a do-it-taker, a person who works hard to achieve results. When reading this book, I asked the CEOs of several branches to talk about their work, and used the knowledge points gained in the book to adjust and lay out the company's recent and future development plans.
This book also directly triggered my review and deep thinking. I have the habit of reviewing every day, and Mr. Song's wisdom and thoughts have greatly improved my inspiration and business thinking. At the same time, the "Song Zhiping model" and "Song Zhiping method" touched me, and improved my habit of running a business as an entrepreneurial entrepreneur: standing in the next 40 years to think about today's strategy, whether today's business has deviated, and how many things to complete from the goal of 40 years?
The book "Steady Management" also brought me great joy, I found the growth pole of the business in the book, positioned the enterprise development in the "little giant" of specialization, refinement, and innovation, focusing on the "health" that I have been deeply cultivating for ten years, which can grow rapidly, and then with the help of the power of policy and capital, I will grow rapidly, approach to a world-class enterprise, adhere to long-termism, and adhere to the dream of listing.
Under the large ecological environment of the domestic and international markets, we must not only guard the current domestic market, but also take the responsibility for the overseas market, and we must firmly "go out". As Mr. Song said in the book: we go out today, it will be a good thing in the long run, through 10-20 years, to complete the transformation from "China is the world's factory" to "the world is China's factory".
At this time, I can't help but think of a sentence: life is ordinary, and mission makes a person great. Every Chinese entrepreneur, especially small and medium-sized entrepreneurs, must understand a question: Chinese entrepreneurs first represent China, China's economy is synonymous with strength, any enterprise is from scratch, from small to large, any great enterprise must go through more than 30 years of growth tempering, we must adhere to long-termism, adhere to the dream of becoming stronger, better and bigger.
Finally, to borrow the inspiring words that Mr. Song said in the book: 2024 is full of hope and expectation, let us have a good attitude, a good state, and build a good ecology together!