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Song Zhiping: Enterprise structure and capabilities

2024-07-17

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Song Zhiping, Chairman of the China Association of Listed Companies and Chief Expert of the China Enterprise Reform and Development Research Association

The pattern and capabilities determine the future of the enterprise.

Text | Song Zhiping

Source |Business Management Magazine

Why do some companies grow rapidly while others stagnate? Why do some companies reappear after encountering storms while others fail? This is something we entrepreneurs often think about. Of course, we can find many reasons, but I thinkThe pattern and ability of an enterprise may be two key factors. Whether an enterprise can grow depends on whether its pattern is big enough, while whether an enterprise can overcome difficulties depends on the capabilities it possesses.

What is the enterprise structure and capabilities

The structure of an enterprise refers to its perspective on time and space.The pattern of an enterprise determines its development and future, and is very important to the enterprise. An old saying goes, "Those who do not plan for the overall situation are not qualified to plan for a specific area." The "overall situation" refers to the pattern. The pattern of an enterprise is related to the cognition of entrepreneurs, which is reflected in the development strategy of the enterprise, the work of the enterprise, and the attitude towards dealing with complex problems. Therefore, the pattern also reflects the problems of people's epistemology and methodology.

The capability of an enterprise refers to its inherent qualities.Management ability, market ability, etc. are general abilities that enterprises must know and master in order to survive. The enterprise ability mentioned here mainly refers to the special abilities that excellent enterprises should have, including the ability to capture opportunities, the ability to integrate relevant resources, the ability to innovate and continuously build the core expertise of the enterprise, the ability to withstand pressure in the face of difficulties, and the ability to recover after experiencing difficulties. These five special abilities can only be acquired through accumulation and training.

The pattern and ability must match.Pattern and ability are in a relationship of mutual restraint and mutual promotion, and need to match each other.For an enterprise to develop, it must first have a certain pattern, but if there is only pattern but no ability, no matter how good the pattern is, it is just a moon in the water or a flower in the mirror.

Therefore, when we run an enterprise, we must consider not only whether our pattern is big enough, but also whether we have the corresponding ability to complete the big pattern. The pattern connects the internal and external problems and resources of the enterprise, creates more opportunities, and drives the growth of capabilities. Therefore, the adjustment of the pattern will bring breakthroughs in the development of the enterprise. The pattern needs to be supported by capabilities, and capabilities will also affect the vision and choices of the enterprise, and shape the enterprise pattern.Only by having an awareness of pattern and capabilities, and grasping the relationship between pattern and capabilities, can an enterprise seize opportunities and develop rapidly.

How to build a business structure

The corporate structure is related to the knowledge, understanding, vision, and mind of the corporate leaders, and is closely related to the corporate strategy and goals. It is also closely related to the company's history, cultural characteristics, and industry environment, and is closely related to the work carried out by the company and the difficulties encountered. We must build the corporate structure around these related factors.

The first is the cognitive pattern of corporate leaders.

Improving the cognitive structure of business leaders requires them to be "well-informed", understand market conditions, industry trends and technological development, and "read thousands of books, travel thousands of miles and make friends everywhere". Most successful entrepreneurs travel around the world and improve their cognitive structure through repeated comparison, verification and thinking.

I have often urged my subordinates to go out more often, communicate more with peer companies, and visit more exhibitions. Otherwise, if they are just "sitting in a well and looking at the sky", how can they build a good pattern?

Entrepreneurs must have a big picture and have insight into new changes in the industry, innovations in technology and business models, and major opportunities facing the company. No one else can do this for you.

The second is the enterprise’s strategic layout.

As the Chinese saying goes, you reap what you sow. Different strategic patterns will bring different results. When making corporate strategies, we must not only lock in our goals, but also determine the market scope. After clarifying the goals, we should look for what we lack, rather than just doing what we have.

Small businesses can also have a big vision. Small businesses do not necessarily have small markets. The "hidden champions" in the German business community are all small and medium-sized enterprises, but they all target the international market. McDonald's and Starbucks have made hamburgers and coffee available in every corner of the world, thanks first to a global strategic vision.

Large enterprises must have a bigger picture. Most of the central enterprises are restructured companies from ministries and commissions. The cadres have the ability to study the macro situation of the industry and the perspective to face the global and national markets. Therefore, the development of central enterprises has a bigger picture. This is actually the biggest advantage of central enterprises compared to many local state-owned enterprises.

China National Building Materials is a story of large-scale development. Over the years, we have continuously adjusted our corporate strategic goals. By returning to the cement business and launching capital operations and joint restructuring, we have grown from a small and medium-sized enterprise deeply in debt crisis to a Fortune 500 company.

Previously, I asked the executives of China National Building Materials to have a broad vision. We should not only be the world's largest manufacturer, but also the world's largest integrated technical service provider. We should integrate technology, management, logistics, engineering services and project investment to build a "Belt and Road" building materials industry system and create value for global stakeholders.

The third is the working pattern of the enterprise.

In corporate work, how to view resources, how to formulate allocation mechanisms, how to deal with the relationship between environmental protection, safety and efficiency, how to face competitors, etc. are all issues of the overall situation.

China National Building Materials advocates the concept of "making good use of resources and serving construction". When making cement, we fully utilize the ore, use a large amount of industrial waste as raw materials, develop renewable energy materials, and create green building materials. Within the company, we take good care of our employees, innovate mechanisms, let employees and the company grow together, and let employees and shareholders share interests.

Enterprises should focus on efficiency, but when it comes to the environment, they should prioritize social interests. China Building Materials arranges factors in the order of environment, safety, quality, technology, and cost. This does not mean that technology and cost are not important, but that environment and safety are more important.

In the industry, there is definitely competition among enterprises, but the interests of enterprises are nurtured in the prosperity of the industry. As competitors in the same industry, they should also cooperate, learn from each other's strengths and make up for each other's weaknesses, and not engage in vicious competition. China Building Materials is a friend, integrator, and active defender of industry order in the industry.

In the process of going global, China National Building Materials has been warmly welcomed along the “Belt and Road” by following the “three principles” of contributing to the local economy, cooperating with local enterprises in a friendly manner, and doing good for the local people. Our experience is thatOnly if an enterprise has a vision can it go well and far.

Fourth, the pattern of enterprises in dealing with complex issues.

Enterprises operate in a complex system in the market and are often faced with various contradictions and difficulties. Therefore, the ability to deal with complex problems often tests corporate leaders.

When dealing with complex issues, we must also have a pattern. The first thing is to "despise them strategically and pay attention to them tactically". We must look at problems from above and outside the problems. We must look at problems from a historical and developmental perspective. We must learn to simplify complex problems, rather than complicate simple problems.

To deal with complex problems, we must be able to take them up and put them down, make choices, "make decisions when necessary", and focus on the main contradictions. We should not dwell on them, prolong the problems, or make them stalemate. We should not try to do everything at once, but should be able to see the main points. It is inevitable that a business will encounter problems. The key is not to exaggerate the problems, let alone generalize them. We should see the achievements and the bright future. On the one hand, we should seriously solve and deal with the problems well, and on the other hand, we should be committed to development and use development to solve problems. Instead of spending too much energy on small problems, we should free up our hands to do some new businesses and use the achievements of new businesses to "make up for the deficit". This is also a pattern problem.

The bigger the pattern, the more confident the company will be.If a person does not have confidence, who will believe him? This is also a question of pattern. China National Building Materials is a story of overcoming difficulties and continuous development. Recently, China National Building Materials proposed a three-legged development model of cement business, new materials business and engineering service business. The new materials business has emerged as a new highlight in the development of the company.

On the one hand, the story of an enterprise must be told in an exciting way, and on the other hand, it must be able to be told continuously. The important work of entrepreneurs is to plan and lay out a good plan for the enterprise. Now Chinese enterprises have reached a critical stage that requires transformation and self-transcendence. If I were to give some advice based on the experience of China National Building Materials, I hope that when you think about corporate strategy, corporate goals, corporate management, and corporate development, and when you encounter difficulties and problems, you will think more from the perspective of the overall situation.

What special abilities should be developed to run an enterprise?

The capabilities of an enterprise are not just the daily comprehensive capabilities of the enterprise. Management capabilities and market development capabilities are all capabilities that should be possessed. What I want to emphasize are some very important and special capabilities of an enterprise, especially in the current changes in the business environment. To adapt to the new normal and lead the new normal, enterprises should have these five special capabilities.

One is the catching power.The catching power mainly refers to the ability to catch opportunities, whether you can jump up and grab it when the opportunity comes.

Losing opportunities in business development is the biggest failure. Major opportunities may only come once every ten years or so. This requires companies to understand their own environment, seize the once-in-a-lifetime historical opportunities, and determine a clear direction and strategy.

What a company does and when it does it is crucial. The market cannot always give us opportunities. The key is whether we can seize the opportunity when it comes. How to seize it?

First, it takes someone with a heart to discover opportunities, and business leaders need to have eyes to discover opportunities, because many opportunities are not easy to detect. As an entrepreneur, you must have a clear sense of direction and be sensitive to opportunities.

Second, opportunities only come to those who are prepared. Scientific planning and adequate preparation are necessary. Companies that have no strategic goals, act blindly, and are insufficiently prepared are doomed to fail.

Third, continuous follow-up learning is very important. I have always advocated that enterprises should keep learning and establish learning organizations. We organize leaders to learn the latest management ideas and the latest economic situation; we organize monthly business analysis meetings, where everyone reports numbers and business experiences, and conducts internal interactive learning; we organize outbound learning, learning from multinational companies. If you don't learn, don't pay attention, and don't prepare fully, it will be difficult to seize fleeting opportunities and combine opportunities with your own company for innovation and development.

The second is integration ability.A very important ability for running a business is the ability to integrate related resources. The development of an enterprise should not only be about the ability to create resources, the key is whether it has the ability to integrate resources.

China National Building Materials has reorganized thousands of private enterprises and launched in-depth internal management integration. This practical achievement won the first prize of national enterprise management modernization innovation and was included in the Harvard Business School case. In fact, the most difficult part of these integrations is the spiritual and cultural integration and identification. I often say that China National Building Materials is an immigrant enterprise, which is inherently inclusive and has cultural identity. We have carried out in-depth publicity and implementation.

The third is innovation.For enterprises, the strength of their competitiveness is largely determined by their innovation capabilities.

On the surface, a company is just a set of numbers, such as sales revenue and profits. Looking deeper, it is the technical expertise, that is, the company's innovation ability. If there is no continuous innovation, the company will not be competitive no matter how big it is. It will collapse when encountering huge risks during growth, and it is even more impossible to obtain good economic benefits. Only by continuously improving the ability of scientific and technological innovation and enhancing the core competitiveness of the company can we be one step ahead of others in everything.

I often tell everyone that when we look at CNBM, we should not only see its strength, but also its ability, especially its innovation ability. CNBM has 26 national scientific research institutes, 38,000 scientific and technological workers, and more than 9,000 patents. It has strong technological innovation capabilities and supports the technological progress and transformation of the industry.

For example, the technology and equipment level of my country's cement industry has entered the "leading" stage from the past "following and running side by side", thanks to our innovation. In the past, a cement production line with a daily output of 5,000 tons required 2,500 people. Later, through innovation and continuous improvement of labor productivity, the number of people was gradually reduced to 1,000, 500, and 200. Now our fully intelligent cement production line only requires 50 people.

Another example is our gypsum board. In the past, the coal consumption per square meter was 2.2 kg, the electricity consumption was 1.2 kWh, and the use of 11 kg of gypsum. Now, the coal consumption per square meter is 0.49 kg, the electricity consumption is 0.4 kWh, and the use of 7 kg of gypsum. Although the selling price per square meter has dropped from 12 yuan in the past to 5-6 yuan now, there is still a good profit.

We have also vigorously cultivated and developed ten new high-tech materials, including optoelectronic glass, glass fiber, carbon fiber, polymer film materials, graphite-based carbon materials, artificial crystals and special industrial ceramics. These businesses have taken the world's leading position in the field of technology, and some of them have ranked first in the world in terms of scale. Innovation is the core capability of an enterprise, and the strength of an enterprise's innovation determines its future.

Fourth, bear pressure.Running a business is not always smooth sailing, nor can it be achieved overnight. Instead, it requires long-term perseverance and the endurance of all kinds of hardships. Sometimes a turning point will only occur after you fight to the end, which can also be called perseverance.

Enterprises will constantly encounter difficulties. The key is whether the enterprises can survive after encountering various setbacks and disasters. Excellent enterprises must have strong pressure resistance. Entrepreneurs have encountered very big difficulties and crises in the process of enterprise development. You should be calm in the face of difficulties. I often say that if you have difficulties, everyone has difficulties. Difficulties are not unique to any one enterprise. Others may have bigger difficulties than you. Any difficulties will pass. You should look at problems from a development perspective and not be intimidated by difficulties. You should take the initiative in the face of difficulties and not complain about others.

I have encountered many problems and difficulties in running a business. When I took over Beijing New Building Materials and Sino-Singapore Group, both were very difficult companies. Later, they got rid of the difficulties and achieved leapfrog development. So I have always advocated facing problems and difficulties with a positive attitude. It takes about 10 years for a company to be familiar with a business, about 20 years to be consolidated, and about 30 years to achieve first-class level. During this period, there will be times when you can't persist. If you give up, China's building materials industry will not have 6 industries ranked first in the world. Whether it is to overcome difficulties or stick to the industry, it requires super strong pressure.

The fifth is resilience.Resilience refers to an enterprise's ability to resist risks and its ability to recover and regenerate after being hit.

Sometimes a company will be knocked down, can it stand up again? Sometimes a company will be fatally wounded, can it recover? This is often the key to whether a company can continue to develop into a well-known brand. Throughout the growth process of many companies, they have all experienced risks or failed. Some companies have never recovered and collapsed, while some companies have survived and have strong resilience.

Risks are objective and companies cannot avoid them. However, it is important to have the ability to resist, immunity and resilience. This is especially true for large companies, because they carry the economic development of an industry or even a country. Companies should regard risks and difficulties as a process of growth, maintain a good state of mind, and use our vitality and the hope given to the company to overcome difficulties. This is the most important quality of a company.

The pattern and capabilities determine the future of the enterprise.Enterprises will face new challenges at every stage of development. Successful enterprises always consider the pattern and capacity building first. Now if Chinese enterprises want to grow from big to great, if they want to become first-class multinational enterprises and century-old stores, our entrepreneurs need to have a bigger pattern and stronger capabilities!