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In 2024, more CEOs of large companies chose to disappear from the public opinion field, but Lei Jun was an exception.

In order to sell more Xiaomi cars, Lei Jun launched rounds of live broadcasts, personally explaining, test driving and recruiting people. Someone commented on his account, "Use the word 'extreme' less next time you hold a press conference," and Lei Jun replied, "Got it." Someone even bought the copyright of Lei Jun's poor English into a funny song. In the technology circle, Lei Jun is called a "model worker." In the automotive circle, his meticulous speaking style is regarded as a dimensionality reduction attack on traditional car manufacturers' press conferences.

On July 16, Xiaomi announced that it would hold Lei Jun's fifth annual speech two days later, with the theme of "Courage", about the ins and outs of Xiaomi's three-year car-making. "More than three years ago, I stood at the crossroads of car-making, very hesitant and entangled." Lei Jun said that he thought about it for a whole week before making the final decision. Once again, Lei Jun chose to stand in front of the stage to increase the exposure or sales of Xiaomi Auto, even though this product was already in short supply.

It is hard to ask for more from a CEO who is in charge of a company with a market value of 400 billion yuan. For Lei Jun, this is his last entrepreneurial venture after Xiaomi mobile phones, and he needs to go all out. But unlike the Xiaomi mobile phone period, Lei Jun tends to take the lead after entering the car manufacturing industry.

Of the eight early partners of Xiaomi, only Lin Bin, Wang Chuan and Liu De are left besides Lei Jun. Among them, Lin Bin resigned as Xiaomi's president in 2019 and became the group's vice chairman, and gradually withdrew from front-line management work; Liu De is currently the executive director and director of the general cadre department of Xiaomi Group, assisting Lei Jun in the management of the group's middle and senior cadres, and is basically in a state of retreat behind the scenes. Wang Chuan began to resign from the front-line position of Xiaomi Group's business as early as the end of 2022.

Chen Rui, who used to be Lei Jun's technical assistant and is now the chairman and CEO of bilibili, once said in an interview that the two sentences by Lei Jun that had the greatest influence on his entrepreneurship were: the most important thing for a company is its model, and a company that relies on people for a long time will not last long; and a company must win with strategy.

For a long time before Xiaomi went public, the company had only three levels of organizational management: partners, directors, and engineers. Each partner was responsible for different business sectors, such as hardware, software systems, and ecological chains. After going public, Xiaomi began to make multiple rounds of organizational structure adjustments. During this period, many partners left the company, and the new executive team members were also constantly changing.

The only thing that remains unchanged is that Lei Jun always stands on the front line.

Xiaomi's Great Leap Forward in the Partnership Era

Xiaomi's loose and people-centered partner management system in its early days was the key to the company's rapid expansion in the early days of the smartphone industry.

Xiaomi has eight founding partners, who come from Microsoft, Google, Motorola, and Kingsoft. In Lei Jun's words, this is a team that is proficient in software, hardware, and the Internet, allowing Xiaomi to survive in competition with hardware giants such as Huawei, Lenovo, and ZTE.

Fu Sheng, Chairman and CEO of Cheetah Mobile, once commented on Lei Jun, "Everyone will more or less overestimate themselves and underestimate others. Lei Jun's greatest charm lies in affirming the value of others. Therefore, it is very easy for a force to gather around Lei Jun, which will produce an indescribable loyalty."

Group photo of Xiaomi when it was founded

In terms of organizational structure, Xiaomi did not adopt the multi-level, bottom-up pyramid structure of traditional companies. Instead, Lei Jun's power was delegated to seven partners. Each partner is responsible for the type of business based on his or her own ability. The partners do not interfere with each other and have greater independent decision-making power.

Among the seven partners, Lin Bin, former vice president of Google Engineering, is responsible for strategic cooperation; Liu De, who came from industrial design, is responsible for the industrial design of Xiaomi mobile phones and Xiaomi's ecological chain; Li Wanqiang, former general manager of Kingsoft PowerWord, is responsible for marketing and sales; Zhou Guangping, who came from Motorola hardware, is responsible for mobile phone hardware and supply chain; Hong Feng, former senior software engineer at Google, is responsible for MIUI; Huang Jiangji (KK), who came from Microsoft, is responsible for Wi-Fi modules, cloud, and routers; and the last person to join, Wang Chuan, the founder of Duokan Reading, is responsible for Xiaomi TV.

At the same time, the business department that each partner is responsible for has only three levels of organizational management: partner, director, and engineer. This makes the flexibility and communication efficiency of Xiaomi's entire organization much higher than that of traditional companies. In addition, Xiaomi's horizontal partner structure allows all business departments to face users directly, thereby speeding up product iteration. For example, the operating system MIUI of Xiaomi mobile phones can be updated once a week.

Relying on its flexible and efficient organization, coupled with its price-performance ratio that exceeded the industry's average, Xiaomi was almost invincible in the mobile phone market in its early days.

From 2012 to 2014, Xiaomi's mobile phone sales growth rates were 2296%, 160%, and 226% respectively. According to data released by market research firm IDC in the third quarter of 2014, Xiaomi's market share in China was 14.8%, surpassing Samsung's 11% and Lenovo's 12.8%, becoming China's largest smartphone manufacturer.

Richard Yu, Chairman of Huawei's Device BG, once said, "If we don't understand Xiaomi, we will just follow it." Huawei hopes to copy Xiaomi in Honor, including its organizational structure. But soon, Xiaomi's "divide and rule" partnership model ran into problems.

The advantage of managing a company under the partnership model is that it can make the best use of people and maximize organizational efficiency. However, if the partners' abilities do not match as the company develops, it will greatly restrict the development of a certain business segment and even affect the company as a whole.

Since the second half of 2015, Xiaomi's supply chain has been significantly disrupted. The Qualcomm orders for Xiaomi Mi 5 were not included in the production scheduling system because the order systems of the two companies were not connected, which meant that Xiaomi placed these orders a month later than it actually was. In this case, if Xiaomi slowed down, it would be quickly replaced by other products because the mobile phone market in 2015 had already changed from rapid growth to saturated competition.

Even more unexpectedly, during a meeting with Samsung executives, Xiaomi's vice president had a fierce conflict with them. As a result of this conflict, Samsung decided not to supply screens to Xiaomi anymore.

Under multiple crises, Lei Jun decided to make changes to his partners. Zhou Guangping, who was in charge of mobile phone hardware and supply chain, resigned and became the chief scientist. After that, Lei Jun personally took charge of the mobile phone department, with more than 50 people reporting directly to him.

"When your middle layer is not strong enough, direct communication is the most effective method, which can ensure that the information in the middle is not transmitted incorrectly." In the official biography authorized by Xiaomi, "Forward", Lei Jun said that for about a whole year, he would schedule at least 15 meetings. It was also during this period that the younger generation of Xiaomi engineers were promoted to become the heads of Xiaomi's various business units.

Afterwards, Lei Jun repaired the relationship between Xiaomi and Samsung through multiple communications and restored Xiaomi's mobile phone business to growth. Unfortunately, after topping the sales volume in the Chinese market in 2014, Xiaomi has never returned to this position.

Xiaomi went public, power concentrated in Lei Jun

If Zhou Guangping's resignation as head of the mobile phone department was an emergency adjustment during Xiaomi's start-up period, then Xiaomi's listing would be the beginning of a major adjustment in the company's organizational structure.

When Xiaomi went public on the Hong Kong stock market in July 2018, the company had nearly 20,000 employees. If the three-level management system of partner-director-engineer is still used, Lei Jun and other partners will fall into the "organizational abyss" and be tied up by countless meetings.

So, two months after its listing, Xiaomi began to adjust its organizational structure and make new personnel appointments.

First, Xiaomi newly established the Group General Staff and Organization Department. Wang Chuan and Liu De, who were partners in the company, were appointed as the Chief of General Staff and the Minister of Organization Department, respectively, to assist Lei Jun in strategic planning and organizational management, and report directly to Lei Jun. Xiaomi also became the third giant company to set up a special organization department after Huawei and Alibaba.

Secondly, partner Hong Feng was originally in charge of MIUI business, and later became the chairman and CEO of Xiaomi Finance. Xiaomi's original four business departments, including TV department, ecological chain department, MIUI department and interactive entertainment department, were reorganized into ten new business departments, and a large number of young executives born in the 1980s came to the fore. For example, Li Xiaoshuang was appointed as the general manager of the TV department, Qu Heng was appointed as the general manager of the ecological chain department, Fan Dian was appointed as the general manager of Youpin e-commerce department, Gao Ziguang was appointed as the general manager of Internet Department 1... The heads of the ten newly promoted business departments are basically employees who joined Xiaomi when it was first established, and all report to Lei Jun.

Prior to this, two partners during the partnership period, Zhou Guangping and Huang Jiangji, announced their resignation before Xiaomi went public. In addition to serving as the president of Xiaomi, Lin Bin also served as the general manager of the mobile phone department; Li Wanqiang was the brand strategy officer, focusing on the company's brand building; Xiaomi's chief financial officer (CFO) Zhou Shouzi became Xiaomi's senior vice president.

It can be seen that after Xiaomi went public, it was almost inevitable that it abandoned the loose and flat management model centered on people and began to manage people with processes and systems. The original horizontal partner organizational structure was transformed into a vertical pyramid structure, and power was further concentrated in Lei Jun, with at least 17 people reporting directly to him.

"Without veterans, there is no inheritance. Without newcomers, there is no future." Lei Jun said in an internal email. It was also from then on that a group of new external executives began to enter Xiaomi's management.

In early 2019, Lu Weibing, former president of Gionee, joined Xiaomi to be in charge of the Redmi mobile phone brand. In June 2020, Zeng Xuezhong, former executive vice president of ZTE in charge of the terminal business unit, joined Xiaomi to replace Lin Bin in charge of the research and development and production of Xiaomi mobile phone products. In addition, Chang Cheng, former vice president of Lenovo and head of the mobile phone business, Wang Xiaoyan, founder of Xiaolajiao mobile phones, and Yang Zhe, former chief marketing officer of Meizu, also joined.

Lu Weibing, current partner and president of Xiaomi Group

Among the executives who joined Xiaomi from outside, Lu Weibing is a special one, because he was "bought" by Lei Jun.

After leaving Gionee, Lu Weibing founded a company called Chengyi Technology, which focused on the overseas hardware market, but the progress was not smooth. In order to invite Lu to join, Lei Jun said straight to the point, "You should not continue to waste time in the wrong direction, but join Xiaomi. I will acquire your company."

Afterwards, Xiaomi was responsible for all the dissolution matters of Chengyi Technology. Lu Weibing joined Xiaomi and he was also the fastest promoted partner in Xiaomi's history.

In the book "Forward Without Bending", Lu Weibing said: "All bosses hope that their capable people can achieve what they are told to do". Lu Weibing himself is a "trader who has been fed with experience and lessons". He has personally worked in the five links of technology, products, supply chain, sales and marketing, and has fallen many times, so he truly understands the complexity of this market.

Less than a year after joining, Lu Weibing took over the China business from Lei Jun. In August 2020, Xiaomi launched a new partnership system to motivate its executive team. Lu Weibing also became a new partner of Xiaomi during this period, setting a record for the shortest time from joining to becoming a partner. After Zhou Shouzi left, Lu Weibing began to be in charge of the international department he had previously managed; after Wang Xiang, the former president of Xiaomi, left, Lu Weibing was promoted to the new president of Xiaomi; after Lei Jun devoted his energy to car manufacturing, Lu Weibing also served as the general manager of Xiaomi brand.

It was also during this period that Xiaomi's founding partners Li Wanqiang and Zhang Feng left Xiaomi, and Wang Chuan, Lin Bin, and Liu De all resigned from their frontline positions. Xiaomi basically completed the replacement of its founding partners and new management, with Lei Jun becoming the center. In the process of power change, the outside world hardly saw the common plots of conflict and infighting. Zhang Feng, the last Xiaomi partner to leave, responded to the reason for his resignation by saying, "There is no infighting. I will take a break in the short term, either retire or start a business."

"Lei Jun is square inside and round outside. He is very disciplined in doing things and easy to get along with, but he always sticks to his inner principles. One of his principles is not to hurt others," Fu Sheng once said.

The end of the partnership system, Xiaomi's methodology is copied

On January 30, 2023, Lei Jun issued an internal letter announcing that Xiaomi will establish two key group governance committees-the Group Operations Management Committee and the Human Resources Committee.

The Operation and Governance Committee (hereinafter referred to as the "Operation and Governance Committee") is responsible for the group's business strategy, planning, budgeting, execution, and daily business management. There are 12 members in this committee, including: Lei Jun, Xiaomi Group President Lu Weibing, Mobile Phone Division President Zeng Xuezhong, Home Appliances Division President Zhang Feng, Ecological Chain Division General Manager Chen Bo, Internet Division General Manager Ma Ji, New Business Division President Zhu Dan, China Region President Wang Xiaoyan, International Division Vice President Xiang Zheng, International Division Vice President Xie Ziyang, CFO Lin Shiwei, and Chief of Staff Pan Jiutang.

Judging from the above list of members, except for Zhang Feng, none of Xiaomi's founding partners appeared in the Economic Committee. Then, with Zhang Feng's resignation at the end of 2023, it also means that the partner management system implemented at the beginning of Xiaomi's establishment has officially come to an end.

As mentioned earlier, the partnership system was the cornerstone of Xiaomi, allowing the company to achieve rapid expansion in the early days. Now, as Xiaomi has expanded significantly, its management model has evolved like most giant companies. For example, each major business unit of Huawei corresponds to a management committee or investment decision-making committee. Huawei's senior management also adopts a committee system, which brings together Huawei's senior managers to collectively lead Huawei.

The difference is that the members of Huawei's senior management committee have worked at Huawei for at least 20 years. Xiaomi, which was established relatively recently, has more frequent changes in the members of its management committee.

Xiaomi's latest management team (far left: Zhang Jianhui, far right: Xu Fei)

On May 8, 2024, Xiaomi's executive team changed again. Lei Jun announced new personnel appointments. Xu Fei was promoted to Group Vice President and Group CMO, and concurrently served as General Manager of the Group Strategic Marketing Department and General Manager of the China Marketing Department; Zhang Jianhui was promoted to Group Vice President and Chairman of the Group Procurement Committee. This is the first time that Xiaomi has appointed two female executives at the same time. Similarly, these two executives are also Xiaomi's founding employees.

It is worth noting that the appointment also announced that Li Xiaoshuang, general manager of the automotive marketing department (formerly general manager of Xiaomi TV), needs to report to Lei Jun, president of the automotive department, and Xu Fei, group CMO.

Comparing the members of Xiaomi's previously disclosed car-making team, it can be found that Xiaomi Auto's executive team is almost all from Xiaomi's original system, which is very different from the team composition of other new car-making forces. For example, except for Li Bin, NIO's executive team comes from GM, Volvo, Chery and other OEMs; Ideal's executive director was previously the director of the research institute of Sany Heavy Industry Body Co., Ltd.; Xiaopeng's president is Wang Fengying from Great Wall Motors.

The reason for this situation is related to the Xiaomi methodology that Lei Jun insists on. Therefore, the only people who can thoroughly implement this methodology are those who have grown up in the Xiaomi system.

In "Xiaomi Entrepreneurial Thinking", Lei Jun believes that the threshold for automobile manufacturing has been greatly lowered, and 30,000 components are highly modular. In the past 10 years, the manufacturing cost of automobile power batteries has dropped by 80%, and there is at least 50% room for decline in the future. The essence of electric vehicles is already a "consumer electronics" product. Therefore, the final outcome of smart electric vehicles will inevitably follow the rules of the consumer electronics industry. When the industry enters a mature stage in 15-20 years, the top five brands in the world will hold more than 80% of the market share.

How to get one of the five tickets? The model adopted by Xiaomi Auto is almost a copy of the methodology of Xiaomi Mobile Phone.

The pricing logic of the consumer electronics industry is generally to multiply the BOM (material and manufacturing cost) cost by 2. The ultimate ideal of Xiaomi mobile phones is to sell a BOM costing 1,000 yuan for only 1,000 yuan, which means all costs are 0. This goal was achieved in the early days of Xiaomi's entrepreneurship. Because of the hot products, consumers lined up to buy, the media took the initiative to report, operators took the initiative to cooperate, and paid before picking up the goods. The channel and market costs of Xiaomi mobile phones are infinitely close to 0.

According to the logic of BOM pricing, Lei Jun believes that as long as the volume is large, the marginal cost of Xiaomi mobile phones can be distributed to the extreme while still making a good profit.

Now, this methodology has been copied to Xiaomi SU7.

In the communication session after the Xiaomi Auto launch, Lei Jun revealed the pricing process of Xiaomi SU7 to Titanium Media APP. Lei Jun said that the company initially set the price of the standard version at 229,000 yuan, and the price of the top version at 350,000 yuan. However, Lei Jun finally decided to let Xiaomi's die-hard users feel enough sincerity and chose to continue to reduce the price.

The final result is that the SU7, which copied Xiaomi's methodology, also copied the success of the Xiaomi mobile phone 1 after its release - using the price-performance ratio that is higher than the industry, to get enough orders, and then to spread the marginal costs and finally make money. According to Lei Jun's introduction at the Xiaomi Investor Conference in April this year, when the Xiaomi SU7 locked in 70,000 units, Xiaomi Auto's gross profit margin reached 5%-10%.

If nothing unexpected happens, Xiaomi will continue to use this methodology in making cars, because Lei Jun is the operator of this business. Similarly, Xiaomi's executive team will continue to change, because Lei Jun is still on the front line.(This article was first published on Titanium Media APP, author | Rao Xiangyu Editor | Zhong Yi)