The premise that determines the business success of an enterprise is not how much economic benefits it has created, but how much value it has contributed.
Take the retail industry as an example, it does not create goods by itself, but sends them to consumers, so the value that retail can create mainly includes two parts: saving costs and improving efficiency.
In the early stage of its development, Wal-Mart chose its stores in the suburbs of the city in order to save costs and improve its competitiveness. Compared with the retail stores in the core area of the city, it can save a lot of rental costs.
Not only that, Wal-Mart also uses high technology, computers and satellites to introduce logistics data into the company, so as to improve the turnover efficiency of goods and make the cost of Wal-Mart lower than all competitors.
All these measures can enable Wal-Mart to provide consumers with homogeneous and low-priced goods.
Munger said that before he died, he had to nag about how good the business model is, that is, to operate the cost and efficiency to the extreme.
Wal-Mart has 6.5438+0.4 million products in the supply chain, and Costco has reduced it to 3,000. In this way, on the one hand, good products can be selected, on the other hand, the procurement scale of single products can be improved and the procurement cost can be reduced.
In pricing, Costco strictly controls gross profit. No matter how expensive the outside goods are, 12% will be added to the cost price of the goods as the selling price of each commodity (the maximum is not more than 14%).
Costco's pioneering work has won the love of millions of consumers in Qian Qian.
Ford has made many feats in running the automobile industry: introducing assembly lines, greatly increasing workers' income, and constantly lowering the price of automobiles. These measures not only did not make the enterprise fail, but made Ford dominate the world in the competition and become extremely rich.
In the final analysis, Ford focused on how to create more value for customers. This is what he said:
In the process of running a business, Ford puts profit in a secondary position, thinking that money can only play a role if it is used where things are really done. He made up his mind that he would never join a company that was eager to make money from the beginning, nor would he join a company involving bankers and financiers; It is to establish an enterprise with the purpose of public interest. In the course of operation, we always focus on three things: reducing prices, expanding production and improving product quality.
When thinking about business, it is not important to understand its business prospects or profitability. What is important is to go back to the origin of business, observe and think about what value it has contributed to customers, and whether it can contribute value better.
Only those enterprises that keep learning and innovating and create more value for customers can stand firm in the ever-changing business situation; And those enterprises that break away from creating value and aim at entrepreneurs' self-ambition mostly leave a feather behind after a period of time.
When deciding to invest in BYD, Buffett asked Wang Chuanfu: What is BYD's competitive advantage?
Wang Chuanfu said through simultaneous interpretation: We are constantly surpassing.
Whether this answer satisfies Buffett or not, we can see that this sophisticated investor attaches importance to the barriers to competition of enterprises.
In 1993 Buffett's letter to shareholders, he said:
Business competition is fatal. In the environment of perfect competition, it is not only difficult for enterprises to make profits, but also related to life and death.
Therefore, in the process of commercial operation, enterprises not only need to think about what kind of service and value they create for customers from the commercial origin, but also need to think about how to establish their own competitive barriers and constantly broaden their moat in the process of commercial operation.
Rey Chemical Company formulated four principles when deciding which commercial project to choose:
1, Rey Chemical does not do simple things (that is, things that potential competitors can easily imitate).
2. Unless it can be vertically integrated, Rey Chemical will do nothing; In other words, Rey Chemical must research, develop, manufacture and sell products to customers.
Rey Chemical won't do anything unless it has a great chance to get special protection, usually patent protection. Unless there is such a thing, R&D energy will not be spent on a project, even if it is in line with Rey's expertise in chemistry, it will not hesitate to sacrifice.
No matter what the target market is, no matter how big the market is, Rey Chemical only produces new products that it thinks can become market leaders.
Hua Weiqi, vice president of Wanhua Chemical, has similar feelings. He said: in the future, we will roll a long slope with thick snow. The ramp should be long, at least focusing on the market demand of chemical materials in the next 50 years, and the snow should be thick. We should do the core technology that domestic companies have not yet done, and prepare for future international competition. Only in this way can our scientific research and innovation ensure enough profits and influence in the future, and the snowball will roll bigger and bigger.
There are different reasons for the success of enterprises: every successful enterprise creates value for customers and establishes unique competitive barriers; The reason why enterprises fail is the same: they can't escape the competition.
It is one-sided to think about the growth of enterprises by understanding the market potential of products. If enterprises want to grow, on the one hand, they need to be based on values and barriers; On the other hand, we need to think about growth from the big environment and the enterprise itself.
The business environment of enterprises is constantly changing with the provision of human productivity. For example, after the emergence of automobiles, the retail industry does not need to rely on the original business form. Wal-Mart, the way to open a shop in the suburbs of the city, can create higher value for customers.
In today's extremely developed information and logistics, people can even stay at home and buy satisfactory goods at extremely low prices. Ali, JD.COM and other e-commerce companies have become the mainstream, while traditional retail formats such as Suning and Gome have gradually declined.
When all enterprises are assembly line production and consumer demand begins to diversify, Ford, which insists on producing only black cars, will find it difficult to support a huge business empire.
How can we really grow up in a changing environment?
Amazon's growth experience is a legend in the history of business. Bezos is a long-term activist, thinking about what is continuous in the ever-changing business environment. He said:
When talking about the development of Amazon, he thinks: Amazon must really think about customers, have a long-term vision and constantly have innovative products. Most companies can't do this. They are concerned about competitors, not consumers. They want to engage in an industry that can make a profit in two or three years. If there is no return in the short term, they will turn to other industries. They like to be followers, not innovators, because the former has a higher insurance coefficient. The secret of Amazon's success is that we are different. Companies with the above three conditions are simply rare.
Vanke, a traditional enterprise, also has these three characteristics. After the financial crisis in 2008, Vanke thought about what would remain unchanged for the future of real estate. After learning from Paldi, they decided that "ability comes first, opportunity comes second". Formulated the "three noes" policy: do not hoard, do not cover the plate, do not be the king, and concentrate on strengthening their real estate business capabilities.
In the case of low financial leverage, Vanke has developed very rapidly. The most important reason is that Vanke has outstanding management ability, which can ensure the quality of housing while achieving high turnover. The outstanding business ability makes many real estate developers willing to choose Vanke for cooperative development, and they can control a lot of resources without Vanke investing huge sums of money to buy land. Since 2008, 80% of Vanke's projects have been acquired through mergers and acquisitions and cooperative development.
Wang Shi himself is a very studious person. When he was managing real estate, he learned from Paldi how to develop the real estate industry, and sought the same in the process of change. Learn from Japanese counterparts how to industrialize production and how to control construction quality; Learn from Sony how to do good service and apply the concept to property services; At the time of the rise of the internet, even actively thinking about how to use the internet to better develop real estate business; He also went to Ailaoshan to visit Chu, hoping to learn some business experience from Chu Orange.
A truly growing enterprise lies not in whether its products have market potential, but in whether it has the following three characteristics: long-term, constant pursuit in change, constant learning and constant transcendence.
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