The 2019 Fudan Management Forum and Fudan Management Award Foundation Award Ceremony was held today (October 21) in Shanghai. Lei Jun, founder, chairman and CEO of Xiaomi Group, was awarded the “Fudan Enterprise Management Outstanding Contribution Award” today. When talking about how to conduct effective business management, he made the following speech, hoping to inspire the leaders of the vast number of startups.
This is the first time in my life that I have won an award in business management. To be honest, I had absolutely no expectation that I would be able to win an award in management, so I was very apprehensive when I received this award. Why panic? Because Xiaomi is still a very young start-up company, it has only been more than nine years so far, and Xiaomi is at a critical moment in comprehensively improving its management capabilities, so when I received the Outstanding Contribution Award for Enterprise Management, I felt apprehensive.
I think Xiaomi still needs the guidance of experts, scholars, teachers and classmates in management. I feel a little ashamed of the outstanding contribution to business management. When I chatted with Principal Xu, I was asking why I was awarded the award. I thought about this question for an hour or two and did not understand it. Maybe we can deduce the reasons from the results, and then talk about a little bit of experience to help everyone.
I think from the results, Xiaomi started the business with a registered capital of 10 million yuan and ten individuals more than nine years ago. Today, nine years later, it entered the world’s top 500 and ranked 468th, becoming the youngest five-year-old in history. Top 100 companies. When I think about it, I think it’s amazing. This is not my contribution, but the entire management team and all employees of Xiaomi, including all our users, who have created this miracle together.
There is no doubt that Xiaomi has become one of the world’s top 500 companies in the nine years since its establishment. Xiaomi can be said to be an important milestone in the history of human business.
Besides the Fortune 500, there are a few things that I think are remarkable. From a dozen people at the start of the business to 24,000 employees, the number does not mean anything. What is more important is that such a young and small company started globalization five years ago, and today it has entered more than 90 countries. market and in the top five smartphone markets in more than 40 countries. 40% of Xiaomi’s revenue comes from the global market, and it has become the 74th place on the BrandZ Top 100 Most Valuable Global Brands list and the 4th place on the list of Chinese overseas brands. In fact, these achievements may be more difficult. You may wish to imagine, in the context of global expansion, recruiting so many people from all over the world, with different languages and different cultures blending with each other, it is really not easy to not capsize. Although we suffered a lot of losses, the overall development is still very stable.
What management experience does Xiaomi have in the past nine years? When I founded Xiaomi nine years ago, I was not actually a college student who started a business for the first time. Before that, I participated in the founding of Kingsoft Software and managed a company with thousands of people, so when I started Xiaomi, I ordered a new one for myself. Very simple request – I want to be a real entrepreneur. This statement is actually very informative, and the most important one is not to over-manage a startup company. The most I think about is how to simplify management, even I don’t need to manage. In the early days of starting the company, we proposed to go to management, go to KPI, go to title. Why do you think so? Because in an era of extremely high speed, we must think clearly about what is the most important.
From this question, I think about what kind of companies do not need management, and what kind of people do not need management. If we find such a group of people and establish a common goal and common interests, will this problem be solved? So I take finding people as the first entry point for management. I want to find people who do not need management. We later summarized three important characteristics of these people.
The first characteristic, first of all, he must be able and capable.
Second, he must have a high sense of responsibility. In the absence of external incentives, this sense of responsibility can ensure that he executes every action in place, so we have very high requirements for responsibility. Because accountability allows us to simplify many processes.
Third, there is a strong self-driving force. This self-driving force is our understanding of the common vision, what kind of thing we do together, and do you agree with this? After that, we adopted the means of the Internet to form a community of interests internally with equity and options, so that Everyone is effectively united for a great dream and for everyone’s own interests.
This is simply to find a group of like-minded people who are like-minded. So in the first year of Xiaomi, we spent 80% of our time interviewing. When we were looking for a key technical person, the core team talked to him a dozen times in three months, and each time lasted four, five hours or even ten hours. It is often said that there is a lack of talents. I think the first thing you should think about is whether you have spent enough time. There is an idiom called Sangu Maolu, but today, it is not an exaggeration to visit Maolu 30 times in order to recruit talents.
We often joke that it’s not that we can’t find talent, it’s just that the company’s efforts are not enough. How to manage people well in start-ups and fast-changing enterprises, you must first find the right people. He must be capable, have a high sense of responsibility and a high degree of self-driving force. After finding such a person, your management will be a little weaker, but there is no problem at all.
Why do we need KPIs in the management process? Because in fact, the essence of business is to provide value to users, but when we tried to simplify it into KPIs, we found that no matter how we described it, it was difficult to find the direction of accurate quantification. Implementing a simple mechanical KPI system can easily fall into the abyss of over-management. I have read a lot of articles about Sony. Sony is a company I used to admire very much. It is a company that I repeatedly studied and studied when I was young, but later there were many problems in management. As far as Sony is concerned, it is definitely pitted by the concepts of division and KPI. I have been in charge of the company for more than 30 years. The core problem here is that if you have a long business line and many business divisions, how does the CEO manage the company? Reports are directly used to manage the company, but the current reports do not mean long-term competitiveness, and after removing KPIs, how can we have new guidance to gather these tens of thousands of people? When we first started our business, we established a very important concept, which is to make friends with users and turn users into friends. This statement is easy to say, but difficult to do. In the 1990s, everyone’s favorite slogan in corporate management was to treat users as gods, but this sentence was purely a lie, because there were not many people who believed in God in China in the past. I said, do you dare to treat users as friends? There is a saying that no businessman is not a traitor. If it is a profiteer, how can you treat users as friends? The users themselves are unwilling.
How to be friends? Xiaomi has put a lot of effort into this. It is not modest to say that Xiaomi’s work in this regard is still more advanced. After repeated exchanges and communication between the board of directors and all shareholders before the listing, we determined that Xiaomi will insist on making good products that move people’s hearts and are priced honestly.
How to reflect our adherence to the price of kindness? We made a board of directors minutes, stipulating that the comprehensive net profit margin of our Xiaomi operating hardware will never exceed 5% in this life and this life. If it exceeds 5%, we will refund all the extra money to consumers. Xiaomi may be one of the few companies that uses a legal form to restrict its net profit margin. In many management sciences, it is said that the higher the profit, the better. Under the requirements of growth and net profit, everyone’s actions are becoming more and more deformed, and many companies are going to a point of no return step by step. So in order to avoid Xiaomi taking such a road, in order to permanently win the trust of consumers, Xiaomi took the initiative to propose that the comprehensive net profit margin of hardware should never exceed 5%.
Xiaomi is a global company. When I proposed this proposal, my idea was no more than 3 points. Later, some shareholders raised their opinions. Considering the fluctuation of global interest rates, I wrote 5 points. Our real idea is to do Hardware products only make a point or two of net profit. Our entire Xiaomi revenue last year was RMB 174.9 billion, and our hardware profit was only about 1%. In this way, when every consumer buys a Xiaomi product, they receive a promise that Xiaomi will only earn one or two if they make such a product. point profit. Because only in this way will we have the opportunity to gain the unreserved trust of consumers.
What am I after? I am pursuing, is it possible for us to build such a brand, consumers do not need to look at the price or quality when they buy things in the Xiaomi store, as long as you need to take it directly and pay for it, this is the business we pursue direction.
We are always wondering whether we can gain the unreserved trust of users, because only when you gain the trust of users, the whole business logic of Xiaomi will be smoother. So Xiaomi’s real KPI is how we can exceed users’ expectations, let users be willing to spread word of mouth, let users become fans, and let users recommend to his friends. In order to achieve this goal, in the first five years of Xiaomi’s establishment, we also set an even more terrible requirement, called zero market fee. In the first five years of Xiaomi’s establishment, we hardly did any advertisements, nor did we hire a public relations company, and we almost never sent out a public relations draft. Many people may say that Lei is always because you have no money. In fact, in 2014, Xiaomi’s valuation has reached a record 45 billion US dollars, and our turnover at that time was also on the scale of 100 billion yuan. In doing so, we just want to verify the most important content, that is, if your product is good, word of mouth can help you reach enough users.
I was in Europe during November this year, and I met many users in Spain, including some of our colleagues, some of whom were early Mi Fans. I said when did you come into contact with Xiaomi, he said in 2010. At that time, when we were not in the international market, there were many global fans who translated Xiaomi’s works into various languages in the world and spread them in various forums and communities. Therefore, when Xiaomi entered various markets around the world, it already had a very strong brand foundation.
How are our KPIs drawn? It is to exceed user expectations, become friends with users, and give users unreserved trust. This is actually the core KPI of Xiaomi. When everyone’s work revolves around this point, you find that the original process, many of the original approvals, and many of the original layers have disappeared, so Xiaomi has the tools of the Internet, the means of the Internet, and the methods of the Internet. Thinking, with very efficient and extremely flat management. This is the second point, go to KPIs. The third point, go to the title.
In the early days of Xiaomi, we found more than 100 people according to the request just now. In fact, their typical images are basically around 30 years old. They have quite a wealth of experience, and they especially want to do some great things. We gathered such a group of people. As of today, there should be 90 to 95 of the 100 people still at Xiaomi, and they are all active in our very important positions.
What does the title we mentioned earlier mean? Basically, we give them a title called engineer, because if it is given to a director, there may be another person who is almost as capable as him, saying that you will definitely not be able to give me a manager. If you were to give me a director, the entire office would be full of directors. If it is an engineer, everyone is an engineer, but it can accommodate more capable people. Therefore, in the early days, Xiaomi deliberately confused the hierarchy. Xiaomi has no hierarchy for a long time, and as of today, as an enterprise with more than 20,000 people, there are only thirteen or four managers above the vice president of Xiaomi Group.
In such a relatively equal atmosphere, each business unit has a very strong initiative. In the early stage, we also achieved great results when we tested the title. Sometimes when we want to promote individual colleagues who have done very well to management positions, they all say that it is not necessary, and it is better now. So based on such a management atmosphere, we started our business for nine years. Of course, at this moment, or after going public last year, we are rethinking how as a public company, how can we make the company more stable, more controllable, more secure, and more innovative and growing.
Based on such a proposition, what are we thinking about? What we are thinking about is how to integrate the management experience obtained by Xiaomi as a start-up company with mature management experience, and then carry out comprehensive management improvement. Because in today’s enterprises with more than 20,000 people, if we still adhere to these ideas of our nine-year premise, some of them are applicable, and some are no longer applicable and need comprehensive improvement. Therefore, Xiaomi is currently in a stage of comprehensive management improvement.
Today, I won the Fudan Enterprise Management Outstanding Contribution Award. Once again, I sincerely thank the jury of the Fudan Management Award Foundation. Thank you for giving me such great confidence and giving me more motivation to do a good job in the company. I have the opportunity. Become a benchmark in management.
thank you all.
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