About this book:
A Brief History of Business is another masterpiece of Liu Run in 2020. This book is about the direction of business evolution, so that you can see the future before others. He who knows the general trend wins the world, whether you are an entrepreneur, a manager, an entrepreneur or an ordinary person living in the business world. Reading this book can help you see through the current business environment, understand the future business trends, and make you the most selective and follow-up fish in career selection, employment and entrepreneurship.
This book has seven chapters, which explain four main business problems:
First, what is business?
Second, why can business progress?
3. Where does the business come from? Where are you going?
Fourth, how do we follow the trend?
With accurate generalization and clear thinking, the author combs the overwhelming business history into the ups and downs of transaction costs and network density, so that you can have a solid framework and understand the underlying logic of business in simple terms.
The essence of business is trading.
The origin of business lies in exchange. Wang Er grows rice for a living, Zhang San is good at raising chickens, and Asako can weave. When one day they have more and more rice, chicken and cloth and can't digest them, they want to exchange their things with others. At this time, the embryonic form of business was established, and the products they exchanged were called commodities.
The essence of a businessman is an intermediary. Everyone has extra items on their hands, but they can't find anyone to exchange. At this time, the role of businessman appeared. The mission of businessmen is to promote commodity trading. They use information asymmetry and credit non-transmission to earn the difference.
The so-called information asymmetry is the purchase channel I know, but you don't know or the money-making channel I found, and you don't know.
This situation still exists until now. Think carefully about whether our real estate agency, marriage agency and professional agency are typical information asymmetry operations.
As long as they have a lot of information about personnel needs, they can use this information to earn money and support themselves.
The most common ones are businessmen who purchase goods in first-and second-tier cities and buy and sell in fourth-and fifth-tier cities.
For example, in the clothing industry, if you go to Guangzhou and Hangzhou, where clothes are produced, it is not surprising to sell them by the catty, but in small cities along the 4th and 5th lines, this situation is impossible.
The so-called credit is not passed, that is, the farther away from me, the less I trust people, that is, we often say that we only do business in acquaintances.
There are many such examples around us, and the most prominent one is the banking industry.
Think carefully about where the bank's money comes from.
Pay low interest and raise money from ordinary people. Because it has a national endorsement, the people can rest assured to give it money.
Where did the bank money go?
Raise interest rates and lend to small and medium-sized business owners or buyers with repayment ability.
The essence of bank profit is to earn the price difference in the middle.
Similarly,
So is the insurance industry,
Raise funds from the people and pay for the risks of the people.
The ultimate destination of insurance is to use the money in hand to find investment projects. As long as the return on investment is higher than the annual claim, there is room for survival.
Back to us ordinary people,
Everyone has an acquaintance mentality. It's better to give to strangers than to familiar people. I always feel that people I know are reliable.
This is also the fundamental reason why businessmen like to make friends.
The ultimate trend of business is to break the information asymmetry, not transfer credit and reduce transaction costs.
In recent years, platforms have mushroomed.
Ali, JD.COM, Didi and Meituan have risen one by one, and the most fundamental reason is the progress of science and technology, which has banned the traditional business operation mode and gradually dismantled the barriers of information asymmetry and credit asymmetry, making business more and more transparent.
The ultimate goal of businessmen is to help users save money. As an intermediate bridge, the most important thing for merchants is to help customers reduce the costs of search, testing, negotiation, payment, transportation and after-sales, so that users can buy and use with confidence.
Why is Didi so successful? Let's see how it works in these aspects.
With the help of the Internet, Didi reconstructed the transaction structure of taxis:
First, develop an APP to help passengers and drivers find each other and reduce the cost of finding them;
Second, it provides one-click calculation of the prices of taxis, hitchhiking, express trains and luxury cars. , from the starting point to the destination, and their models, which reduces the "comparative cost" of users;
Third, establish a file for each driver to reduce the "examination cost";
Fourth, automatically calculate the floating price during peak hours, encourage more express trains and free rides to join the operation, solve the problem of difficulty in taking taxis during peak hours, and reduce the "negotiation cost";
Fifth, by binding online payment, the "payment cost" is reduced.
With the rise of the Internet, Ali, Baidu, Tencent, Xiaomi, Meituan and so on. Seized the great opportunity of the trend dividend and erupted like a volcano.
Why can they create such an unimaginable miracle?
In essence, it is the "information trading platform" of the collapse time.
Their existence makes the transaction cost of information drop suddenly, information asymmetry collapses, how many businessmen who rely on information asymmetry to survive are banned, and how many new jobs are created.
If the Internet is a huge opportunity like a blowout, then the Internet of Everything will be the next direction of ocean currents.
The arrival of the Internet of Everything means that our life is about to enter the era of artificial intelligence.
At present, I have to mention the smart products of Mijia APP.
Mijia's 100 intelligent products do not need to be turned on manually by themselves, and operate independently according to the external environment, which is convenient and comfortable.
For example,
The indoor thermometer at home can detect the drop of room temperature and automatically turn on the floor heating according to the temperature change; The air detector detects the increase of PM2.5 and can automatically turn on the new fan. ...
Everything in the future will be intelligent. How to meet the future and follow the trend deserves our consideration.
Iterative history of business
In the process of introducing business iteration, let's learn a new term: network density.
Generally speaking, it is the ratio of "actual number of connections" to "possible number of connections" between trading nodes.
The essence of business is trading, and trading depends on connection. The more the connection evolves, the higher the network density and the more developed the commercial civilization.
Knowing the role of "network density" in business progress, the following introduction is easy to understand.
The history of commercial development is simply: primitive commercial society-small-scale peasant economy-linear commerce-central commerce-all-connected commerce.
The primitive commercial society is a lonely "transaction node" that is not connected with the outside world. They are all social forms that rely on mountains to eat water and draft, and do not communicate with each other. The network density is 0.
Small-scale peasant economy is a kind of male farming and female weaving. Everyone does what they are good at and then trades with each other. At this time, the network density gradually changed from 0 to 5, indicating the evolution from primitive commercial society to small-scale peasant economy.
With the increase of business density, the connection between two trading nodes initially formed a point-to-line connection, and line segment commerce came into being, which was the first real evolution of the business world. Since then, a group of people who are neither producers nor consumers have appeared in the world: businessmen. The value of a businessman is to become an intermediate node, connecting producers and consumers.
With the increasing commercial density, some trading nodes become super nodes because of their natural geographical advantages, policy advantages and technical advantages. This growing "super node" has brought commercial civilization to the next era: central commercial transactions.
Today, we are in the era of "central commercial civilization". Central commercial civilization takes advantage of its super node to reduce or even eliminate the information asymmetry that traditional businessmen rely on, thus reducing transaction costs.
The success of Meituan is because it has turned itself into a super node and reduced the information asymmetry between restaurants and diners.
The success of Didi is because it makes itself a super node, which reduces the information asymmetry between drivers and passengers;
The success of the same city is because it has become a super node, reducing the information asymmetry between employers and temporary workers;
You see,
All developments revolve around how to reduce transaction costs.
The general trend of the world, divided for a long time, divided for a long time.
The increase of network density will bring super nodes; The further increase of network density will eliminate super nodes.
The Internet age is pushing us towards decentralized commerce.
New Zealand P2P Insurance Company allows everyone to be a co-founder and writes down the terms of this "compensation group". As long as other participants agree, the closed loop can be completed and gradually replace the dominant position of traditional insurance.
Don't the water drops around us have the same effect, and cherish each other? Let people get the greatest protection with the least money.
The ultimate destination of decentralized business will be fully connected business, which we call the utopia of the business world.
The ultimate destination of business is that businessmen are no longer needed.
How do we follow the trend?
We must understand that the real profit is only a short-term dividend brought about by the imbalance between supply and demand. Once there is competition in the trading structure, supply and demand will gradually regain balance in the competition, and dividends will disappear.
Profits come from the absence of competition. As businessmen in the future, we should understand that enterprises with core competitiveness are the basis for becoming bigger and stronger, and only places with less competition can make profits; The closer to the place where there is no competition, the higher the profit.
After earning the bonus, we should quickly dig our own moat to protect our site from being occupied by competitors and protect our users from being moved out.
When you are accidentally blown into the sky by the tuyere, don't think about how I am so powerful, but how can I get down? Using the money earned in the early stage to improve management efficiency, investing in brand value is the most important thing.
Whether an enterprise can grow and survive in the world depends on whether you dig the moat in time.
The so-called moat is the strategic advantage you gain through various means.
The correct attitude lies in whether to follow the direction of business evolution and seize the "dividend"; Can you dig a moat as soon as possible and keep the "profit"?
The moat can start from several aspects:
1. Intangible assets, including licenses and brands.
Licensing is what I can do but you can't, including administrative licensing and patent licensing.
The value of a brand is embodied in three levels: understanding, trust and preference.
"Understanding" means popularity, and it needs money to constantly advertise and let the public know widely;
"Trust" is reputation, and it takes time to get the recognition of users, which requires the quality of goods to pass;
"Preference" is loyalty, which needs to be sustained by feelings. It's best to connect the product with the story, so that users can think of your product when they think of a certain scene.
The brand can be said to be a knife you handed to consumers: if I want to be sorry, you can stab me with this knife.
2. Cost advantages, including scale and management.
Cost = (fixed cost/sales scale)+variable cost
Reduce fixed costs (reduce investment in production lines)
Reduce variable costs (reduce the purchase price of raw materials)
Increase sales scale
If you really feel that you have a clear view on the direction of business evolution, you can directly scale up and use the price advantage to scare competitors out of the moat, expand the sales scale and reduce the sales cost.
Reduce management costs
Management is an eternal moat. If strategy is a grand decision, then management is a daily lesson.
Why can't you ever learn to fish in the sea?
Let's see how Haidilao gets paid.
Pay part of the salary to the employees' parents, and they will spur the employees.
How does Haidilao pay dividends to the store manager?
A: Get 2.8% of its store profits.
B: Get 0.4% of the store profits as dividends. Although small, the store manager can also get a dividend of 3. 1% from his apprentice shop and 1.5% from his apprentice shop.
As the store manager, you will train your apprentice and encourage him to open a branch without the supervision of the boss, because the apprentice's business situation determines the master's year-end dividend.
Interests tied together, but also afraid that the master has reservations about his disciples?
You can do it, others can't, you have an advantage in cost, and the cost reduction brought by management will always be a deep moat.
3. Network effects, including users and ecology.
Users: The more users there are, the more users there will be. The essence of the "giant struggle" between China Mobile, China Unicom and China Telecom is to grab the moat of "users".
Ecology: Strive to expand the number of users. When the number crosses the critical point, it becomes a monopoly.
The total value of the platform is that the more people are retained, the greater the potential of the platform, such as Lily Net and jiayuan Net.
To seize the market, we must rely on external forces to allow a large amount of capital to settle in and ensure sufficient funds. Let's think about the large amount of financial subsidies when Meituan and Didi started, and whether the underlying logic attracts users.
Of course, while the iron is hot, we have to be hard-working, make our products good enough for users to experience for free, and then subsidize them in time to quickly lock in customers. This is the right way to lock in customers. Of course, the subsidy in this link should be enough and fast enough to retain customers.
4. Migration costs, including habits and assets.
Habit, find ways to make users rely on your products and create a "habit box".
Apple has a patented slider unlocking function, which directly separates the Android system from the Apple system. Once users of Apple mobile phones get used to using Apple mobile phones, they never want to use Android again, just because the use methods are inconsistent and the experience is different. Apple dug this moat, and it is difficult for Android phones to attract Apple users.
Assets, lock users, and increase the cost of user migration.
Why is it so difficult for the telecommunications industry to "port the number to the network"?
Remember, the future history of the business world is ultimately written by trendsetters. Choose your script and write "Your Future History".