21 posts tagged with "strategy"

Introduction: Targeted Approach​

Strategy is about designing and executing a combination of punches: Where is the enemy? Where should we strike, and where should we not? How do we throw our punches? How can the first punch set up the second and third? It’s not a vague mission statement or a list of aspirational goals; it’s a specific, focused plan to overcome a challenge.

The core of any strategy can be broken down into a simple but powerful formula:

Core of Strategy = Analyzing the current situation + Guiding principles + Coherent actions

Let's dive into what separates a good, effective strategy from the fluff and formalism that so often passes for one.

Part One: Good Strategy, Bad Strategy​

1 Good Strategy is Unexpected​

A truly good strategy is often unexpected, yet upon reflection, it seems perfectly reasonable. It cuts through the noise and complexity to find a simple, powerful path forward.

Consider Steve Jobs' return to Apple in 1997. The company was on the verge of bankruptcy, with a bewildering array of products. A "bad strategy" would have been to set aggressive growth targets for every product line. Instead, Jobs did the unexpected: he drastically simplified, slashing the product line to just a few core offerings he knew could be profitable and excellent. When asked how he would compete with the dominant Wintel alliance, he didn't deliver a grand strategic plan. He simply smiled and said he would wait for the next big wave of change in the industry. His strategy was one of focus and patience.

Another example is Operation Desert Storm during the Gulf War. The media narrative focused on a slow, deliberate advance of the main forces. This was intentional. The real strategic maneuver was a flanking "left hook," where another massive force secretly penetrated deep into enemy territory from an unexpected direction, leading to a swift and decisive victory.

These examples highlight a critical lesson: doing everything and believing everything is important is the same as believing nothing is important. Good leaders and strategists must have the courage to choose not only what to do but, more importantly, what not to do.

2 Viewing Strengths with a Discoverer's Eye​

The most fundamental type of strategy is the SO strategy—leveraging Strengths (S) to seize Opportunities (O). But where do these strengths come from? Often, they are not obvious and must be discovered by looking at a situation from a new perspective.

As Shakespeare wrote in Hamlet, "There is nothing either good or bad, but thinking makes it so." In strategy, strengths and weaknesses are relative and dynamic. The classic story of David and Goliath is a perfect illustration. To the conventional observer, Goliath was the strong one—an experienced, giant warrior. David was a weak newcomer. Yet, David's agility and proficiency with a sling, a ranged weapon, turned Goliath's size and close-combat specialization into a fatal weakness.

This principle applies in business as well. Walmart's victory over the once-dominant Kmart came from discovering an advantage in an unexpected place. The prevailing retail wisdom was that a large supermarket needed a population base of at least 100,000 people to be viable. Walmart defied this by opening stores in smaller towns. How? Through superior supply chain management. Walmart created an integrated network of stores, allowing for efficient distribution, lower inventory costs, and greater bargaining power. Kmart's stores were geographically scattered, making their logistics far less efficient.

During the Cold War, strategist Andy Marshall advised the U.S. to pursue a strategy of competitive advantage against the Soviet Union. Instead of matching the Soviets tank for tank, the U.S. should leverage its technological and economic strengths to develop systems that were cheap for America to build but incredibly expensive for the Soviets to counter. This included developing hyper-accurate missiles and stealthy submarines. This asymmetric strategy placed unbearable economic strain on the Soviet Union, contributing to its eventual collapse.

3 Bad Strategy​

Bad strategy is more than just the absence of a good one; it's a specific kind of formalism with four common characteristics:

1. Empty rhetoric / Fluff: It's a collection of buzzwords and grand-sounding statements that lack substance. For example, a bank claiming, "Our core strategy is to be a customer-centric intermediary," is essentially saying, "Our bank's core strategy is to be a bank." It's meaningless.

2. Inability to confront challenges: If your strategy doesn't identify and address the primary obstacles, it's just a wish list. A plan to climb a mountain that doesn't mention the sheer cliffs, bad weather, or limited supplies isn't a strategy; it's a daydream. This is a reminder that choosing foundational metrics is crucial; if it cannot be quantified, it cannot be improved. A positive example of confronting challenges head-on is DARPA, which defines its mission by tackling specific, high-risk, high-reward technological hurdles.

3. Mistaking goals for strategy: Goals are not strategy. A company announcing a "20/20 strategy"—meaning 20% revenue growth and a 20% profit margin—has not articulated a strategy. It has stated a goal. It says nothing about how these numbers will be achieved. Metrics are a way to measure progress, not a plan for making it.

4. Sub-goals that are irrelevant or unrealistic: Goals are the overall aim; objectives are the sub-goals to get there. Good strategy channels limited energy and resources into one or a few pivotal sub-goals that, once achieved, create a cascade of new advantages. Bad sub-goals are often just a long list of things to do, with no prioritization, or they are completely disconnected from reality.

4 Why Are There So Many Bad Strategies?​

If the hallmarks of bad strategy are so clear, why is it so pervasive? There are three primary reasons:

1. Making choices is painful. Strategy is about focus, which means saying "no" to many appealing options. This is difficult for individuals and even more so for organizations. Consensus-seeking often leads to watered-down, meaningless compromises. When DEC was facing a strategic crisis, its leaders couldn't agree on whether to focus on "servers," "chips," or "solutions." To avoid conflict, CEO Ken Olsen chose a compromise that satisfied everyone and meant nothing: "DEC is committed to being a leader in providing high-quality data products and services." It was a death sentence. In contrast, great leaders like Eisenhower, who abandoned his campaign promise to roll back Soviet influence in Eastern Europe after realizing it was unfeasible, and Intel's Andy Grove, who made the gut-wrenching decision to exit the DRAM market to focus on microprocessors, understood that true strategy requires hard choices.

2. People prefer to use templates without thinking. We are surrounded by books, consultants, and tutorials offering fill-in-the-blanks "strategic plans." This creates a dangerous confusion. For instance, leadership is often mistaken for strategy. Leadership inspires and motivates people, making them feel good about transformation. Strategy articulates what specific transformation is worth pursuing. Having a document titled "Strategy" does not mean you have a good one.

3. People believe in human dominance over fate. There is a pervasive belief that a positive attitude can conquer all obstacles. New Age ideas like the "Law of Attraction" create a fantasy that simply wanting something badly enough will make it happen. This is mental opium. It distracts from the hard work of diagnosing the problem and designing a coherent set of actions to solve it. It’s far more productive to imagine the process of achieving a goal, like simulation training, than to simply visualize the successful outcome.

5 The Core of Good Strategy​

At its heart, a good strategy has a simple, logical structure known as the kernel. It consists of three essential elements:

1. Diagnosis: A clear-eyed explanation of the nature of the challenge. A good diagnosis simplifies a complex reality by identifying the crucial aspects of the situation.
2. Guiding Principles: The overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. It's the guiding light for action.
3. Coherent Actions: A set of coordinated steps that are consistent with the guiding principle. These actions should be reinforcing, creating a synergy where the whole is greater than the sum of its parts.

Let's look at three examples:

• In Business Competition: The challenge often comes from external changes.

  1. Diagnosis: Analyze the structure of the competition, not just performance metrics.
  2. Guiding Principle: Choose a policy that addresses the competitive landscape and creates a new advantage.
  3. Coherent Actions: Allocate resources and design actions to execute that policy.

• In Large Organizations: The challenge is often internal.

  1. Diagnosis: Identify internal obstacles like bureaucracy, conflicting interests, and outdated processes as the primary problem.
  2. Guiding Principle: Adopt a restructuring strategy designed to foster innovation and break down silos.
  3. Coherent Actions: Change the distribution of power and people to enable new, more effective processes.

• Amazon's Flywheel Effect:

  1. Diagnosis: E-commerce and cloud services are industries with high fixed costs and high potential returns. The key is to relentlessly lower the cost structure to pass savings to customers, driving growth.
  2. Guiding Principle: Design a self-reinforcing "flywheel" where lower prices attract more customers, which attracts more sellers, which expands the store and distribution, which allows for greater efficiency and even lower costs.
  3. Coherent Actions: Build AWS data centers, fulfillment networks, and e-commerce services that power this flywheel, creating a nearly unassailable infrastructure.

The point about "coherent actions" is especially powerful. These actions are not just a to-do list; they are designed to help each other. As a manager, you might introduce a principle like, "I will never make you do anything that does not help your core work." This creates coherence and focus.

This kind of strategic coordination doesn't happen by accident. It must be deliberately designed and centrally imposed. While centralization can be a negative, a completely disorganized approach is also doomed because different departments have conflicting incentives. A sales team wants to please customers with urgent, custom orders, while the production department needs stable, long-term runs to be efficient. You can't do both perfectly. Smart organizations don't aim for 100% communication; they achieve the right amount of coordination to execute the strategy.

Part Two: Sources of Strength​

The power of a good strategy comes from focusing limited resources on the few pivotal objectives that will generate the biggest results. It's about using your best steel on the cutting edge. So, where does this strategic power come from?

• Leverage: Finding a pivot point where a small amount of focused effort can create a massive effect. Leverage can come from:

  1. Forecasting: Accurately anticipating buyer demand or competitor reactions.
  2. Pivot Points: Identifying a critical point that amplifies your power. When 7-Eleven entered Japan, it discovered that customer tastes were highly localized. By empowering store managers to adjust their own inventory based on local feedback, they created a massive advantage.
  3. Concentration: Many efforts have a threshold effect; investing below a certain level is the same as investing nothing. Diffusing an advertising budget thinly across the country is less effective than concentrating it in a few key regions to achieve dominance there first. As Mao Zedong practiced, concentrate superior forces to annihilate the enemy's effective strength one piece at a time.

• Grasp: To deal with a complex problem, break it down into a set of solvable sub-problems. When President Kennedy announced the goal of landing a man on the moon, NASA broke it down into clear, achievable milestones: developing larger rockets, unmanned exploration, parallel development of fuel types, and building the lunar lander.

• Chain Systems: In a system where performance is determined by the weakest link, the entire system must be strong. Such systems are incredibly difficult for competitors to replicate. IKEA is a prime example—its unique advantage comes from the tight integration of product design, sourcing, flat-pack logistics, and customer assembly. Strengthening a chain system is a non-linear process; the true benefit is often only realized when the final link is fortified, which requires leaders with immense patience.

• Design: A good strategy is a well-designed solution to a problem. Hannibal's victory at the Battle of Cannae, one of the most crushing defeats in Roman history, was a masterpiece of strategic design. He intentionally weakened his center to lure the Roman legions forward, then enveloped them with his stronger flanks. In business, this means analyzing how a system works—who the key players are, how they interact, and what their needs are—and then designing an offering that perfectly meets the needs of the most critical decision-makers.

• Focus Strategy: Instead of trying to serve everyone, provide superior service to a specific customer group. The Crown Cork & Seal Company thrived in a competitive industry by focusing exclusively on small, urgent orders for small manufacturers—a niche the big players ignored.

• Growth: Healthy growth should be the result of a great product and a sound strategy, not the goal itself. Forcing growth through reckless acquisitions, as the aforementioned Crown company did, often leads to disaster. Its stock price crashed from $55 to$5. Cases like LeEco and Yahoo's acquisition spree serve as similar warnings.

• Utilizing Advantages: Advantage is always specific to a domain. A world-class marathon runner won't necessarily excel at the high jump. A startup the author advised excelled at making innovative fabrics but failed when it tried to move into clothing manufacturing, not realizing they were two completely different industries with different skill sets and competitive dynamics.

• Dynamics: A powerful source of advantage is a wave of exogenous change. Good strategists don't just react to change; they anticipate and ride the wave.

• Inertia, Momentum, and Entropy: Large organizations have tremendous inertia. This can be a weakness, but it can also be harnessed. Microsoft successfully used its massive B2B inertia in Office suites to transition into a B2B cloud giant with Azure. At the same time, closed systems decay due to entropy, which may be why American companies are so keen on bringing in external managers—to introduce new energy and perspectives.

Among these, riding a wave of external change is particularly powerful. There are generally two ways to gain a strategic high ground that is easy to defend:

1. Independent innovation.
2. Riding the wave of change.

It's easy to be an armchair general in hindsight. To make predictions before the fact requires a deep understanding of the present, allowing you to deduce the second and third-order effects of a change. For example, when television emerged in the 1950s, everyone saw that the film industry would suffer. But few predicted the next step: the rise of independent films. With the old studio system dying, independent producers were free to focus on making truly great films, because only a great film could draw audiences away from their TVs and into theaters.

Here are some signposts that may point to a new competitive high ground:

1. Fixed costs soar: High capital investment creates barriers to entry. The massive cost of blockbuster films gives rise to major studios; the development cost of large software systems gives rise to large software companies.
2. Deregulation: When rules change, new opportunities emerge. China's reform and opening-up is a prime example.
3. Prediction bias: Most people are bad at seeing beyond the immediate trend.

• The illusion of growth: Growth never lasts forever. The faster sales grow, the faster a market can become saturated. A person who buys a TV is unlikely to buy a second one right away.
• The illusion of winner-takes-all: While network effects are real, large companies are often plagued by internal problems, and new waves of change can disrupt even the most entrenched incumbents.
• The illusion of winners always winning: History is littered with dominant companies that failed to adapt. Just ask Yahoo.

4. The incumbent effect: Established players are often unwilling to cannibalize their short-term profits to embrace a new, disruptive model, as described in the Innovator's Dilemma.
5. Attractor state: This is the state the market should reach in equilibrium. It’s an incredibly powerful concept for thinking about the future.

The attractor state is different from a company's vision. A vision is internal; an attractor state is an objective analysis of where the entire industry is heading. It is shaped by two forces:

• Accelerants: These are events that prove a new model is viable and trigger rapid change. Napster showed the world that digital music could be easily shared. Bitcoin showed that virtual currencies could create immense wealth. Mao Zedong's idea that a single spark can start a prairie fire is an example: concentrating forces to win a decisive battle could demonstrate the regime's weakness and ignite a wider revolution.

• Impediments: These are forces that slow down the transition to the attractor state. The public's fear of nuclear power, for example, is a major impediment to its adoption, even if it is a technically viable energy source.

Let's apply this to the newspaper industry. Take The New York Times. Its printing and distribution costs were two to three times its subscription revenue, with the difference covered by advertising. After 2009, two waves hit: new digital media eroded readership, and Google and others siphoned away advertising dollars. News media can differentiate on three dimensions: space (local vs. global), frequency (breaking vs. weekly), and depth. The market's attractor state likely leans toward specialization in these niches, not broad coverage. To adapt, The New York Times should leverage its powerful brand to aggregate information from many sources, rather than relying solely on its expensive staff of journalists, and focus on the deep-analysis niche where it has a true advantage. The more specialized the reader base, the more valuable it is to advertisers.

Part Three: Thinking Like a Strategist​

So, how do you develop the mind of a strategist? The short answer is to cultivate an "external perspective"—to constantly think about why you think the way you do.

16 What Kind of Discipline is Strategy?​

Strategy is not a deductive science like engineering. The author recalls meeting with Hughes engineers who disliked strategy because their thinking was deductive. They planned with certainty; they wouldn't design a bridge that might hold the required weight.

Deductive reasoning only works in a closed system where you have all the information. When facing the unknown and the competition, it fails. Worse, deductive reasoning can stifle innovation. The trial of Galileo, who used empirical observation to challenge deductive dogma, helped spark the Enlightenment, which showed us how to deal with uncertainty through scientific empiricism.

Good strategy is not deduced; it's an inductive process. It's a hypothesis about what will work, which is then tested in the real world. You observe, form a hypothesis, collect data, validate or reject the hypothesis, and repeat. When Howard Schultz founded Starbucks, his hypothesis was that Americans would pay a premium for an Italian-style café experience. He didn't bet the farm at once. He started with a small café, tested and optimized the model, and only then scaled up to full vertical integration.

17 Focus on the Process of Thinking​

Steel magnate Andrew Carnegie once asked the father of scientific management, Frederick Taylor, for his single best piece of management advice, offering him $10,000 (a fortune in 1890). Taylor's advice was simple: "List the ten most important things you have to do, then start with the first one and stick to it until it's done." A week later, Taylor received his check.

The power of this exercise isn't in the final list. It's in the process of creating the list. We cannot always control our thoughts, but we can control the process by which they arise. The core solution is to think about your thinking.

Here are some tools to help:

• Develop good habits:

  1. Use frameworks and processes to fight shortsightedness.
  2. Rigorously question your own judgments.
  3. Write down your judgments so you can review them later and see how they held up.

• Tools and Processes:

  • The Strategic Kernel: Always return to the Diagnosis, Guiding Principle, and Coherent Actions.
  • Create-Destroy: Don't just argue against a straw man. Set up a virtual expert committee in your head, with each member arguing for a different, credible alternative.
  • Corner Solutions: Good strategies are often "corner solutions." They don't try to please everyone with a bland compromise. They focus intensely on solving a specific problem for a specific group.

• Contact Review:

  • Before meetings or major decisions, predict how people will behave. Rehearse the situation. This forces you to recognize your own biases, understand others' motivations, and get a clearer picture of the market.
  • Through this practice, you can cultivate your own informed viewpoint and gain the confidence to disagree with the consensus when necessary.

18 Maintain Your Views​

The final challenge is to have strong opinions without being stubbornly narrow-minded. The solution, once again, is to constantly seek an external perspective.

Global Crossing was a company that made decisions based on its own rising stock price and subjective desires. This created a dangerous, closed feedback loop between the market's perception and the company's actions, leading to a spectacular collapse. As Gödel's incompleteness theorem suggests, any sufficiently complex logical system has propositions that cannot be proven true or false from within the system itself. To judge right from wrong, you need knowledge from the outside.

The 2008 financial crisis was a product of this same internal perspective, combined with herd behavior. Everyone inside the system believed housing prices could only go up, and anyone who disagreed was ignored. A true strategist cultivates an independent viewpoint based on external facts and principles, allowing them to see what the herd misses.

For any tech company trying to bring an innovative product to the mainstream market, crossing the chasm is a critical challenge. On one side are a few enthusiastic early adopters; on the other side is the vast but pragmatic mainstream market. Many promising companies have stumbled at this point. The niche-and-next strategy is essential for making this leap.

Challenges to Cross the Chasm​

Tech startups face several challenges when trying to cross the chasm:

• Lack of customers: The initial customer base is small, and their payments often cannot cover the next period of development.
• Unaligned demands from different visionaries: Early adopters and visionaries have different, sometimes conflicting, requirements.
• Competitions from alternatives: As you educate the market, alternatives emerge, diluting attention and resources.
• Unsatisfaction from investors: Investors expect rapid growth, but the reality is often slower, leading to pressure and frustration.

Analogy to Invasion of Normandy​

Crossing the chasm is like the Allied invasion of Normandy on D-Day. It’s an act of aggression against an entrenched competitor dominating the mainstream market. The long-term goal is to take over this market, but the first step is to secure a beachhead—a niche market that is readily achievable and leverage-able for long-term success. If we do not take the niche, we cannot worry about our next targets.

• "D-Day" Landing Day: This isn't the product's public launch but the moment it officially enters a precisely chosen niche market and launches a full-scale attack. The sole objective is to capture the first beachhead at all costs before resources run out.
• Consolidating the beachhead: Only by standing firm on this small piece of land, establishing solid defenses, and ensuring continuous supply (success stories, reputation, cash flow) can you have the opportunity to advance into the vast inland market. A hasty full-scale market assault will only lead to being divided and surrounded by defenders, ultimately resulting in total defeat.

Solution: Focus on a Niche Market​

To win, focus on a niche market that is:

• Readily achievable: Your resources are sufficient to win and become the leader.
• Leverage-able for long-term success: Success in this niche can be used as a springboard to adjacent markets.

The sole goal at this stage should be to create a pragmatist customer base that is reference-able for the mainstream market. Reference-able customers are satisfied ones.

Selection Criteria:

1. Small enough scale: Your limited resources (human, financial, and energy) can form a significant advantage in this market, quickly becoming the leader.
2. Sharp enough pain points: The target customer group is experiencing severe pain that existing solutions can't address, and they have a strong and urgent buying motivation, willing to pay for your "imperfect" solution.
3. High enough spreadability: Members of this group are closely connected, and a successful case can spread like wildfire among peers, creating a word-of-mouth effect that significantly reduces subsequent customer acquisition costs.
4. Strong expandability: After successfully capturing this beachhead, you can naturally extend your influence to adjacent market segments. It's like bowling; knocking down the first key pin can trigger a chain reaction, toppling many others.

Execution Principles:

• Market-driven, not sales-driven: It is fatal to be a sales-driven company; we must be market-driven. Firmly reject one-time orders that seem tempting but dilute your core positioning. All decisions must serve the core strategic goal of capturing the niche market. Unfortunately, following this strategy takes discipline because leaders can hardly resist the temptation to make short-term money.
• Build a "whole product": To achieve the goal, we must ensure the first set of customers completely satisfy their buying objectives with the whole product—a generic product that gives them a compelling reason to buy. Mainstream pragmatists are not buying an isolated product but a complete solution. You need to fill in all necessary services, support, training, compatibility interfaces, and other peripheral aspects around the customer's "purchase reason," making them feel "ready to use, worry-free."
• The only measure of victory: The true sign of victory is not sales revenue but buyer-to-buyer reputation. Net Promoter Score (NPS) and spontaneous referrals within private communities are the litmus tests of whether you have truly captured the beachhead. The key indicator is word-of-mouth reputation among buyers.

Why Niche-and-Next Strategy?​

The niche-and-next strategy is counterintuitive and hard to stick to. If we do not adhere to it, it is like lighting a fire without kindling.

• Resist short-term temptations, build a long-term moat: Chasing every sales opportunity may bring short-term revenue but will ultimately lead you into the quagmire of opportunism, unable to form a sustainable competitive advantage. Focus is necessary to build a deep moat.
• Plan strategic depth, avoid being surrounded: Without a clear "next target," even if you win the first battle by chance, you are likely to fall into confusion after a brief victory, being surrounded and eliminated by competitors who have caught on. You must have already aimed at B and C positions when capturing position A. If we do not take the niche, we do not worry about our next targets.
• Build an "ignite → fuel" model: The first chosen niche market is your "kindling," and its successful ignition will win you valuable time and resources. The pre-planned "next target" is the continuous "fuel," ensuring the flame can spread continuously, eventually forming a prairie fire.

Be a Niche Market Leader to Sell to Pragmatists​

Another reason to be niche-focused is that pragmatist customers want to buy from market leaders. As a small company still crossing the chasm, the only available strategy is to take a “big fish, small pond” approach. Achieve market leadership in a focused niche, and use this as a foundation to expand to the mainstream market.

• Redefine "leadership": When over 90% of potential customers in that niche market instinctively list you as their first or even only choice when considering a purchase decision, you have truly achieved leadership.
• Create a "model room" for pragmatists: In this small pond, work closely with customers to create a batch of credible, quantifiable "pragmatic model users." These success stories and impressive ROI data will be your strongest endorsement to open the doors to a broader mainstream market.
• From "push" to "pull": When reputation and success stories gain momentum, you will no longer need to laboriously sell to mainstream pragmatists. They will come to you through industry conferences, media reports, and peer recommendations, seeking your help. At this point, the journey of crossing the chasm has truly achieved a decisive victory.

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In summary: First become the leader in a small, reference-able, and leverage-able niche, then use this beachhead as a springboard to advance to the larger mainstream market according to plan.

Chapter 1: Strategic Concepts and Decision-Making Contributions During Alibaba Period​

From 2006 to 2017, Professor Zeng Ming served as Alibaba Group's Chief Strategy Officer ("Chief of Staff"), deeply involved in the formulation and execution of Alibaba's overall strategy. As Jack Ma's strategic advisor, he helped create and develop important business segments including Taobao, Alipay, Alibaba Cloud, and Cainiao Network. During his time at Alibaba, Zeng Ming promoted a series of forward-looking strategic concepts, the most prominent being the platform ecosystem strategy and decentralized organizational transformation.

1. Platform Ecosystem Strategy: Zeng Ming believed that Alibaba's core competitiveness was not in a single business, but in building future commercial infrastructure—various types of platforms or ecosystems. He pointed out that the traditional emphasis on "core capabilities" had become outdated, and future enterprises should develop organically like networks, becoming more biological rather than mechanical. Under his advocacy, Alibaba gradually expanded from an early e-commerce platform to a complex ecosystem encompassing e-commerce, payments, logistics, cloud computing, and more, positioning itself as a builder of social business ecosystems. The Alibaba Group underwent a major structural adjustment from late 2012 to 2013: breaking down the e-commerce business into 25 small business units (BUs), reorganizing financial businesses into multiple divisions, and Jack Ma stepping down as CEO. This transformation was based on Zeng Ming's judgment—"if Alibaba wants to promote the development of an ecosystem externally, the company must also achieve ecologicalization internally". Therefore, Alibaba internally broke the traditional bureaucracy, distributing power and business into smaller, more flexible units, forming an internal ecosystem to adapt to the needs of the platform ecosystem strategy.

2. Decentralized Organizational Transformation: Zeng Ming advocated for distributed collaboration and small team operations as an organizational model to adapt to the rapidly changing environment of the internet era. He participated in formulating Alibaba's "four transformations" policy: marketization, platformization, ecologicalization (species diversity), and data-driven approach. For example, on the Taobao platform, external merchants and service providers were introduced to jointly create diversified goods and services, enabling "small but beautiful" and category-diverse sellers to flourish, achieving more personalized matching between buyers and sellers. At the organizational level, Alibaba abandoned the traditional unified management center and encouraged internal innovation through frontline empowerment and horse-racing mechanisms. As Jack Ma said: "Traditional management is no longer suitable for Alibaba; we need to build an ecosystem that integrates internal and external resources." After the 2013 reorganization, each business unit had greater autonomy, forming a competitive and cooperative ecosystem among them. This decentralized organization laid the foundation for Alibaba to maintain agility in the rapidly changing internet competition. When summarizing Alibaba's experience, Zeng Ming stated that future organizations are more like networks, needing to break bureaucracy and move toward network-based organizational forms. Alibaba provided momentum for the continuous evolution of the platform ecosystem through internal entrepreneurship, partnership systems, and other methods that made the organization flatter and self-driven.

Chapter 2: Zeng Ming's Core Theoretical Concepts​

Based on practical experience, Zeng Ming developed a series of strategic management theories, including "Momentum Theory," "C2B Strategy," "New Business Civilization," "De-KPI," "De-Management Center," "Self-Evolving Organization," and "Structural Empowerment." These concepts form the core of Zeng Ming's strategic thinking system. The background, core views, and application cases of each are explained below.

2.1 Momentum Theory​

Background: The rise of the internet and mobile internet has created a business environment full of high uncertainty and disruptiveness. Facing these changes, entrepreneurs need to grasp the major trends of the times to succeed. Through long-term research and practical experience, Zeng Ming realized the importance of "momentum" in strategy.

Core Views: "Momentum Theory" emphasizes following and utilizing the momentum contained in era trends to formulate strategy. Zeng Ming advocates that entrepreneurs should have a "ten-year vision," maintaining keen insight into future trends while "working for one year" tactically to find breakthrough points. "The times make heroes," and respecting and grasping major trends is a prerequisite for success. He further points out that leaders should not only follow trends but also dare to create trends. Only by skillfully utilizing momentum (the energy accumulated by trends) can enterprises become leaders of their time. The first principle of strategy is to develop with major trends in a highly uncertain environment to gain momentum. In a word, "without utilizing momentum, it's impossible to become a leader of the era."

Application Cases: Apple, after Steve Jobs' return, captured the major trends of digital music and smartphones, redefining the industry landscape through iPod and iPhone, thus achieving a takeoff. In contrast, PC giant Dell failed to see the major trend of mobile internet, missed momentum, and declined. Alibaba's own development was a result of following the macro trends such as the rise of China's consumer internet and the popularization of mobile payments. Zeng Ming often cites these examples to remind entrepreneurs: during key transformation periods, it's essential to assess major trends with a long-term perspective, and going with the flow can achieve twice the result with half the effort.

2.2 C2B Strategy​

Background: In the traditional industrial era, business was dominated by the B2C model (Business to Consumer, where enterprises mass-produce and then sell to consumers). However, with the development of internet and data technology, consumer roles have strengthened, and the market has begun to shift from "seller-driven" to "buyer-driven." In 2012, when discussing with Jack Ma, Zeng Ming proactively proposed the "C2B" strategic concept, believing it to be the most important business paradigm in the digital age.

Core Views: "C2B Strategy," or Customer to Business, emphasizes that consumer demand drives enterprise production and value chain operations, which is a disruption of the traditional B2C model. Zeng Ming points out that C2B means that enterprises must design business processes around customers' personalized needs, achieving customized services on a large scale. He calls C2B the "most basic model of the new business era," and only when C2B emerges on a large scale across industries can the entire business chain be completely restructured by the internet and data. The essence of C2B is a fundamental change in business logic: from the enterprise-led supply chain of the past to a network-collaborative demand response chain. In the traditional model, enterprises first mass-produce standardized products, then stimulate demand through advertising and distribute products through channels; while in the C2B model, enterprises first interact with consumers to explore potential demands through data, then quickly organize resources to meet these demands, achieving on-demand production and services.

Application Cases: The development of the Taobao platform embodies the C2B concept: a large number of sellers adjust their product supply based on consumer search, browsing, and other data, achieving consumer data-driven supply. The Taobao customization, Juhuasuan, and other businesses promoted by Alibaba around 2010 were all explorations of C2B. For example, in the clothing industry, some merchants obtain fashion trends and consumer preferences through Taobao and Tmall, then conduct small-batch flexible production, truly achieving "production based on sales." Zeng Ming predicted that 2018-2023 would be a key period for the breakthrough of the C2B model, with large-scale personalized customization appearing in more industries. He even further proposed derivative models such as "S2B," exploring innovative paths where platforms (Supply/Support) empower numerous small business merchants to better serve the customer end. In summary, the C2B strategy reflects Zeng Ming's judgment on future business models: customer-driven will replace manufacturer-driven, and data will link customized needs with social supply chains.

2.3 New Business Civilization​

Background: "New Business Civilization" is a macro concept proposed by Zeng Ming for business transformation in the information age. As the internet deeply penetrates the economy and society, new technologies and values are reshaping business rules, which he calls the emerging "new business civilization." As early as 2009, Zeng Ming gave a speech titled "The Dawn of New Business Civilization," believing that the mass production line and standardization model of the industrial age would give way to new networked and intelligent models.

Core Views: Zeng Ming believes that the DNA of new business civilization consists of two double helices: network collaboration and data intelligence. These two organically integrate to give birth to entirely new business species in the digital era. Network collaboration refers to breaking down complex business activities and having them collaboratively completed by numerous participants through internet platforms, making the process more efficient. Data intelligence refers to the use of big data and AI to continuously iterate and optimize decisions, more accurately perceiving and meeting user needs. Under the new business civilization, business operations are more biological—enterprises coevolve with ecosystems, far more flexible than mechanical hierarchical organizations. He emphasizes that "precision" is the essential difference between new business and old business. The industrial age succeeded through scale, while the new business era pursues precise fulfillment of individual needs: first exploring potential needs through interaction, matching supply in real-time, and providing customized services based on scenarios. Zeng Ming calls this upgrade the transition of business from "extensive scale" to "refinement and accuracy."

Application Cases: Google's search advertising analyzes user intent to achieve precise ad delivery by scenario and real-time bidding fees, which is the embodiment of "refinement" in the new business civilization; Taobao's advertising system can track the entire chain from advertising investment to sales conversion, making every penny's effect transparent, which is the embodiment of "accuracy." Additionally, ride-sharing platforms like Uber use data intelligence to achieve real-time matching and dynamic pricing, but Zeng Ming analyzes that their dilemma lies in the lack of true network collaboration effects—scale effects alone are insufficient to form monopoly barriers. In contrast, Taobao, because it built payment, credit evaluation, and other network collaboration systems early on, although developing slowly, laid the foundation for ecosystem network effects, and once the network matured, it achieved explosive growth. These examples illustrate that the new business civilization places more emphasis on collaboration effects and data-driven competitiveness, rather than traditional resources and scale. Zeng Ming summarizes: "Network collaboration + Data intelligence = Intelligent business", a simple formula that encapsulates the secret to Alibaba's success and reveals all the keys to future business.

2.4 "De-KPI" Concept​

Background: In traditional management, KPIs (Key Performance Indicators) are widely used for assessment and motivation. However, in rapidly changing and innovation-driven environments, overly rigid KPI assessments can lead to short-sighted organizational behavior and constrain innovation. While promoting empowerment-type organizations, Zeng Ming proposed the concept of "De-KPI" (breaking free from KPI constraints), believing this to be a hurdle that organizational transformation must overcome.

Core Views: "De-KPI" does not mean completely abandoning indicators, but rather breaking free from the inertial constraints of traditional KPI management and establishing a real-time, dynamic, multi-dimensional indicator system. Zeng Ming points out that if a company promotes empowerment and innovation while still using old-style KPIs to assess and reward employees, employees will ultimately be led by these short-term indicators, making it difficult for the organization to truly transform. Overly simple KPIs distort strategy: many enterprises simplify strategies into one or two numerical targets (such as annual revenue, profit) during execution, which cannot reflect the true requirements of the strategy and instead cause management to sacrifice long-term development to achieve indicators. He stated directly: "Breaking free from KPI inertia is a very difficult but necessary hurdle for organizational innovation." Therefore, new-type organizations need to shift from single KPI orientation to online dynamic indicator matrices. Through digital tools, managers can monitor business health and progress in real-time, evaluating team contributions with multi-dimensional indicators, rather than a few static numbers at the end of the year.

Application Cases: At Alibaba, in the early days to encourage Taobao's rapid market expansion, Jack Ma boldly set the "double million KPI" (enabling 100,000 sellers to achieve annual incomes over 10,000 yuan and bringing 100 million consumers to online shopping within a year), a visionary indicator that at once shifted the team's focus from just staring at GMV (Gross Merchandise Volume). But as business complexity increased, Alibaba gradually de-emphasized hard KPI indicators for various sub-businesses, instead adopting more horse-racing mechanisms, process indicators, and user feedback for evaluation. Zeng Ming also advocated using data dashboards to provide real-time feedback on business status, allowing teams to self-correct without superior orders. This change effectively avoided behavior just for the sake of KPIs, making the organization more focused on creating user value and long-term strategic goals.

2.5 "De-Management Center" and Self-Evolving Organization​

Background: "De-Management Center" is an innovative idea proposed by Zeng Ming for organizational structure. Traditional enterprises rely on top-down hierarchical decision-making and centralized management, but in an era of high uncertainty, this model responds slowly and suppresses frontline creativity. To this end, Zeng Ming advocates weakening central control and shifting toward an empowering, self-evolving organizational model that allows the organization to evolve in a self-driven manner.

Core Views: "De-Management Center" requires reducing dependence on a single authority and allowing decisions and innovations to emerge from within the organization. Zeng Ming points out that many leading enterprises today are exploring "operation without CEO commands"—even without boss-level instructions, the organization can operate efficiently in coordination. To achieve this, enterprises need new mechanisms to answer three questions: Without central control, how does the organization ensure healthy operation? How does it maintain the right direction? How does everyone truly collaborate? His answer is: use culture and vision to build consensus, use data and platforms to provide transparent feedback, and use distributed power to stimulate initiative. The focus of management will shift from "control" to "motivation" and "empowerment." As he says, the core of the industrial age was bureaucratic management, while the network age must break bureaucracy and move toward network-type organizations. In such organizations, central managers no longer direct everything in detail, but rather enable frontline employees to make decisions and collaborate through mechanism design. This self-organization can continuously self-evolve, constantly producing high-quality strategic decisions and innovations. "Self-evolving organization" refers to such an organization that dynamically adjusts strategy and continuously emerges innovations under external environment feedback. Zeng Ming emphasizes that in the midst of dramatic changes, being right once is far from enough; organizations must cultivate the ability to innovate continuously—letting strategy and innovation grow "bottom-up" within the organization.

Application Cases: The co-creation mechanism widely implemented within Alibaba embodies the de-management center thinking. Core employees participate in strategic discussions together, dynamically adjusting direction according to market changes, making strategic decisions emerge collectively within the organization. For example, the strategy for the annual "Double 11" shopping festival is not decided by executives behind closed doors, but is optimized in real-time by various business teams under data guidance, eventually forming a global consensus. In terms of organizational culture, Alibaba's "horse-racing mechanism" allows multiple teams to explore similar projects in parallel, with the successful ones prevailing, which is actually a decentralized adaptive evolution. In the early days of Taobao, multiple teams simultaneously developed different versions of product features, "growing wildly" with survival of the fittest, ultimately leaving the solution that best matched users. Similarly, Huawei's "rotating CEO" system and Haier's self-operating entity model are also attempts to weaken the single center and stimulate organizational self-evolution. Zeng Ming's ideas provide a theoretical foundation for such practices: future excellent enterprises should be self-evolving organisms, not machines driven by upper-level centralization.

2.6 Structural Empowerment​

Background: "Empowerment" has become a buzzword in management, but Zeng Ming places more emphasis on "structural empowerment", which means embedding empowerment into the organizational structure itself through institutional and tool-level design. This way, empowerment is no longer just a matter of leader attitude but becomes part of the enterprise's operating mechanism.

Core Views: Structural empowerment requires enterprises to build platform systems that enable employees and partners to access needed resources and capabilities at any time. Zeng Ming points out that the future is an era of creativity, where much traditional management knowledge will be replaced by AI, and the greatest value of humans lies in innovation. Therefore, organizations need to stimulate human creative potential through empowerment. Empowerment is not just a slogan but must be implemented at the tool level. He exemplifies that for complex organizations like Alibaba, empowerment must rely on technological tools, among which *"data middle platform"* is a very important empowerment tool. The data middle platform precipitates the data and technical capabilities of various company businesses into universal modules, ready for use by front-end teams, greatly improving the efficiency of innovation and trial-and-error. Zeng Ming explains that the core value of the middle platform lies in allowing front-end innovation to change rapidly, equivalent to providing strong support for innovation. This is a form of structural empowerment: through platformized infrastructure (data, technology, operational support, etc.), capabilities are tooled and distributed to teams, allowing small teams to do what big companies can do. Structural empowerment also includes mechanism-level empowerment, such as equity incentives and benefit-sharing mechanisms, giving employees a sense of ownership, transforming from "I have to do it" to "I want to do it." In Zeng Ming's view, organizational principles are evolving from the past incentive to empowerment and co-creation. Empowering organizations enable talents to create value in a self-driven manner by providing space, resources, and help, rather than relying on manager supervision.

Application Cases: Alibaba is particularly outstanding in empowering ecosystem partners. For example, basic services provided to merchants such as Alipay payment, Cainiao logistics, and Alibaba Cloud computing are a form of "structural empowerment," helping small merchants reduce technical and operational barriers to entrepreneurship on the platform. Another example is Alibaba Cloud's development of open SaaS interfaces, allowing numerous third-party software service providers to connect, which is equivalent to empowering the entire ecosystem to serve merchants together. Looking at the company internally, Alibaba's middle platform strategy precipitates the technical capabilities that were repeatedly built by various business lines, turning them into shared services empowering all business departments, greatly enhancing overall collaborative efficiency and stimulating product innovation in frontline teams. Zeng Ming emphasizes, whoever evolves into an empowering enterprise first is more likely to become a winner in the intelligent business era. This is because structural empowerment enables the creative power of the entire ecosystem to be exponentially amplified, forming a virtuous cycle. This concept is influencing more and more enterprises to think about how to build platforms to empower employees and customers, thereby achieving growth together.

Chapter 3: Key Ideas in Representative Speeches, Articles, and Works​

Zeng Ming has systematically expounded the above strategic ideas in public speeches, published works, and articles. This chapter selects three representative works—"Smart Business," "The Dictator's Innovation," and "Fierce for Ten Thousand Years"—to extract his core concepts.

3.1 "Smart Business"​

Work Background: "Smart Business: What Alibaba's Success Reveals About the Future of Strategy" is a book published by Zeng Ming in 2018, systematically summarizing his observations and practices during more than ten years at Alibaba. The English version of this book was published by Harvard Business School Press. The book combines numerous Alibaba cases and classic business cases, aiming to provide strategic guidance for the digital age to enterprises in all industries.

Key Ideas: "Smart Business" proposes a refined formula: "Network Collaboration + Data Intelligence = Smart Business". Zeng Ming emphasizes that this equation reveals the reason behind Alibaba's success and is also the essence of future business. The book explains in detail how network collaboration reorganizes business processes that were previously vertically integrated through internet platforms into dispersed, flexible, scalable, globally optimized processes; and how data intelligence records and iteratively optimizes all business data, more accurately mining user needs and providing personalized products and services. The smart business era is therefore defined as: solving problems through large-scale multi-role real-time interaction (collaboration) and continuously optimizing decisions through full-chain data feedback (intelligence). Zeng Ming believes this new strategy is applicable to enterprises in any industry, not just internet companies.

A famous case in the book is Alibaba's annual "Double 11" shopping festival. Zeng Ming calls it a perfect example of network collaboration: Taobao/Tmall itself does not produce a single product, but through the platform, it mobilizes tens of millions of sellers and millions of partners to work collaboratively, fulfilling massive orders throughout the day. Such complex trading activities could not be completed by traditional vertical enterprises, but in the platform ecosystem, various links collaborate to achieve results far exceeding the efficiency of a single enterprise. This proves the power of network collaboration. On the other hand, data intelligence also plays a key role in Double 11: real-time data analysis guides inventory allocation, logistics routing, and marketing strategies, forming global optimization. All these validate the new strategic framework advocated in "Smart Business."

Impact and Evaluation: "Smart Business" comprehensively organized Alibaba's commercial evolution process and strategic new blueprint for the first time. The strategic framework and organizational principles proposed in the book (such as the new positioning theory of point-line-plane-body, the organizational evolution from management to empowerment, etc.) provide thought guidance for numerous entrepreneurs. It can be said that the book integrates Zeng Ming's various concepts proposed over the years (C2B, new business civilization, collaborative effects, etc.) into a systematic whole. As stated in the book: "This is a strategic guide for the digital economy era." Many enterprise executives use this book as essential reading for learning internet thinking and intelligent strategy. Through this work, Zeng Ming established his influence in the field of strategic management academia and industry, being hailed as the authoritative summary of the "Alibaba experience" by "Jack Ma's military advisor."

3.2 "The Dictator's Innovation"​

Work Background: "The Dictator's Innovation" is a thought-provoking proposition put forward by Zeng Ming in a certain speech or article. The title carries a hint of humor and contradiction: on one hand, "dictator" refers to centralized leadership with strong power, on the other hand, "innovation" requires diversity and vitality. Behind this phrase actually lies Zeng Ming's unique insights into the relationship between leadership and innovation.

Key Ideas: Zeng Ming points out that in the early stages of innovation and at critical decision-making moments, centralized leadership can often play a key role. He describes how some outstanding entrepreneurs exhibit firmness and decisiveness like "dictators" when driving innovation. This is not derogatory, but emphasizes the importance of clear vision and strong execution for innovation breakthroughs. For example, Zhang Xiaolong, the father of WeChat, adopted an almost decisive style when leading the WeChat product, insisting on a "one-man show" to maintain the purity of the product experience, which was one of the reasons for WeChat's rapid rise. Similarly, Steve Jobs was seen as a "innovation dictator" in Silicon Valley, and his personal pursuit of perfection and decisive decision-making created Apple's disruptive products. Through these cases, Zeng Ming points out: in rapidly changing innovation fields, a visionary leader needs to centralize decision-making power at critical moments, boldly try and error, and even break bureaucratic resistance with personal authority. This "dictatorial" leadership can escort innovation in its early stages.

However, he also emphasizes that "the dictator's innovation" does not mean one person accomplishes everything. On the contrary, successful "innovation dictatorship" is often built on stimulating team passion and keenly capturing user voices. Once the innovation direction is verified as effective, leaders should timely delegate power, allowing broader creativity to participate. Zeng Ming's view reflects a consideration of dynamic balance in leadership: innovation needs a relaxed and free atmosphere, but also needs strong leadership to anchor direction in the initial chaos. As he said, "the most important core ability of enterprises today is not whether a strategic decision is right or wrong, but whether there is a system that can continuously make strategic judgments and corrections." If the initial autocracy can evolve into later openness and co-creation, then the enterprise will have both explosive power and sustainability.

Application Examples: Many of Alibaba's early product innovations also embody this point: for example, when Taobao was first created, Jack Ma insisted against opposition on not charging commissions from sellers (free model), a decision with a strong personal style that created the miracle of Taobao rapidly accumulating popularity. Similarly, when Alipay was initially promoting guaranteed transactions, it faced questioning, and Jack Ma ordered "do it first, talk later," and this determination is also a manifestation of "dictatorial" innovation. It was later proven that these decisions opened new chapters for Alibaba. Through "The Dictator's Innovation," Zeng Ming reminds entrepreneurs: in an era when thousands of troops are exploring innovation, don't just pursue democratic consensus and fall into mediocrity; sometimes you need the courage to break through forbidden zones alone. Of course, he also calls for turning successful experiences into the collective wisdom of the organization after "dictatorship," using mechanisms to make innovations continuously emerge, rather than forever relying on individual heroes.

3.3 "Fierce for Ten Thousand Years"​

Work Background: "Fierce for Ten Thousand Years" is a rather jianghu-flavored expression, originating from a themed speech or article title by Zeng Ming (the specific source is often entrepreneurial forums or Hupan University sharing). This phrase sounds exaggerated but reflects his unique interpretation of entrepreneurial spirit and has become a motto circulated among entrepreneurs.

Key Ideas: "Fierce" means strong, brave, not afraid of challenges. "Ten Thousand Years" symbolizes an extremely long time span. Connecting the two, Zeng Ming uses this humorous phrase to emphasize that entrepreneurs must have lasting determination and fearless spirit. The core ideas include: courage and tenacity. First, the entrepreneurial journey is full of unknowns and difficulties, and only a "fierce" mindset can break through barriers—this means daring to break conventions, boldly trying and erring, not fearing failure or mockery. Second, "ten thousand years" implies long-termism. Zeng Ming repeatedly advises entrepreneurs that great undertakings cannot be accomplished overnight, and they must be prepared psychologically to persist day after day for ten years. Just as Alibaba proposed to be a "102-year company," this is a symbol reminding enterprises to take a long-term perspective and continue to strive for the future. Therefore, "Fierce for Ten Thousand Years" can be understood as: persisting to the end with aggressiveness and perseverance. No matter how external circumstances change, truly excellent entrepreneurs must have both the vigor of newborn calves not fearing tigers and the persistence of water dripping through stone.

Application Examples: Jack Ma and Alibaba's growth process is exactly a portrayal of "Fierce for Ten Thousand Years": from the 18 founders starting the business in 1999, to adhering to beliefs when the internet bubble burst, to later e-commerce wars and financial storms, in the face of every severe challenge, the Alibaba team displayed extraordinary resilience and courage, ultimately surviving harsh winters and winning victories. This spirit has also influenced the students of Hupan University. Zeng Ming shares many failure cases in Hupan classrooms, aiming to prepare entrepreneurs psychologically for "nine deaths and one life," facing the winding road of entrepreneurship with strong will. He says: "The greatest enemy of excellence is being content with goodness," and only by maintaining a fierce upward momentum can one continuously climb to new heights. Therefore, this phrase is both an encouragement to entrepreneurs and an extension of Zeng Ming's strategic thinking at the human level: strategy is not only analysis and planning but also needs the support of spiritual strength. It is this style of both rational insight and passion that makes Zeng Ming's speeches widely welcomed by audiences and also injects confidence and fighting spirit into countless entrepreneurs.

Chapter 4: Systematic Summary and Outlook of Enterprise Strategy, Organizational Management, and Innovation Methods​

Integrating the above ideas, Professor Zeng Ming has constructed a strategic management system for the intelligent business era, systematically summarizing enterprise strategy formulation, organizational management, and innovation methods, and making forward-looking prospects for future development.

1. New Paradigm of Strategy Formulation: Traditional strategy seeks to reduce uncertainty, formulate long-term plans, and execute efficiently. But Zeng Ming has redefined strategy: strategy is no longer a static plan, but a dynamic process of repeated iteration between Vision and Action. He proposed the "AV cycle" (vision-action rapid feedback loop) model. Specifically, enterprise leaders must first have a long-term industrial endgame judgment (Vision), but under rapidly changing environments, any prediction may deviate, so what's more important is the continuous process of "prediction-experimentation-correction". Action itself becomes an exploration tool: rapid execution, small-step trial-and-error, validating or correcting the initial vision from market feedback. This cycle repeats itself, allowing strategy to self-adjust and develop. Zeng Ming emphasizes: "What's important is not whether the prediction is right or wrong, but whether you are constantly making predictions." Through high-frequency iteration, enterprises can find certainty in uncertainty. He also points out that wasting some resources is worthwhile to quickly test and find direction; internet companies dare to progress on multiple lines and conduct redundant experiments for this reason. This shift in strategic thinking has enlightened many traditional enterprise managers: rather than trying to formulate perfect plans, it's better to learn while doing, seeking the optimal path in dynamics.

2. New Principles of Organizational Management: Zeng Ming's summary is that future organizations must transition from "management-oriented" to "empowerment-oriented". Management-oriented organizations rely on hierarchical commands and KPI assessments, suitable for stable environments; while empowerment-oriented organizations emphasize network collaboration and creativity, adapting to the rapidly changing intelligent era. Specific new principles include: vision-driven replacing instruction-driven—letting all employees understand the company's long-term mission, uniting through shared vision rather than constraining through regulations; culture and mechanisms replacing hierarchical control—guiding behavior through values, equity incentives, shared results, rather than through administrative orders; empowerment replacing management—leaders' roles changing from commanders to coaches and servers, providing resource platforms for the frontline to create greater value; co-creation replacing top-level decision-making—encouraging employees to participate in strategic discussions and innovation projects, forming bottom-up decision emergence mechanisms. Additionally, organizational structures will become more flattened and elastic. Zeng Ming deduces that the best form for creating new businesses in the future may be "special forces"-style small teams: a dozen people working closely together can support an entrepreneurial project. These small teams, supported by the company's internal loosely coupled platforms, plus externally open network collaboration, form a three-layer organizational structure of "tightly coupled small teams + loosely coupled platforms + open networks". In this form, efficient execution will increasingly be undertaken by AI, and human energy will focus on creating unique value. In a nutshell, future organizations are a kind of human-machine collaborative, network-evolving organism: AI handles tedious affairs, humans exert creativity, and the two collaborate in operations. This series of new organizational principles by Zeng Ming provides operational guidelines for enterprises transitioning from industrial paradigms to digital paradigms.

3. New Approaches to Innovation Methods: In the field of innovation, Zeng Ming particularly emphasizes embracing uncertainty and cross-border integration. He points out that uncertainty means opportunity, and true strategy should grasp potential demands that have not yet manifested. Therefore, enterprises should encourage exploratory innovation, preferring to experiment in multiple directions rather than adhering to a single direction. Alibaba's internal "horse-racing" mechanism is precisely to maintain diversity in response to an uncertain future. Zeng Ming also mentions the "point-line-plane-body" strategic thinking to guide different innovation paths: point breakthrough (single-point innovation like Uber focusing on ride-hailing), line integration (building an industry chain), plane orientation (creating multi-sided market platforms), and finally body as an ecosystem. Different enterprises should choose suitable innovation paths based on their own situations. Additionally, he is very concerned about technology-driven innovation. In recent speeches, he has discussed how AI technology is triggering business paradigm changes: "AI essentially solves the problem of decision efficiency and costs, with its core value lying in creating new supply." As artificial intelligence develops, machines will liberate people from repetitive, boring mental labor, giving people more time to engage in creative matters. This will give rise to many previously unimaginable new products and services. Zeng Ming predicts, "In principle, there will be no 'product companies' in the future, only 'service companies,' with products merely being carriers of services." In other words, enterprises need to transform into user-centered, scenario-based service providers. To meet this trend, he suggests that enterprises accelerate digital and intelligent transformation, using AI, big data, and other technologies to upgrade business models. In terms of organizational and intelligent entity co-creation, he depicts a future picture: AI becomes employees' "colleagues," organizational structures are redefined, and human-machine integration produces new work paradigms. Facing such a future, he encourages enterprises to maintain a spirit of lifelong learning and self-revolution, proactively embracing technological changes, even if it means overthrowing their old models. This self-iteration is the embodiment of the "self-evolution" spirit advocated by Zeng Ming at the innovation level.

4. Future Prospects: Zeng Ming is full of confidence about business transformation in the next 10 years and beyond. In his view, human business society has experienced agricultural economy and industrial economy, and is now entering a new era based on intelligent technology. This is a civilization-level leap. In his second "Looking Ten Years Ahead" public lecture, he pointed out that the AI era has arrived, like welcoming a new "iPhone moment." He predicts that three major technological mainlines—General Artificial Intelligence, Autonomous Driving, and Scientific Intelligence (AI for Science)—will reshape various industries. The underlying logic of enterprise value creation will also change—in the past, information asymmetry was a business opportunity, now AI makes information matching tend toward perfection; in the past, insufficient production capacity was the norm, now production overcapacity requires mining potential demands. Therefore, he believes that "uncertainty is the opportunity for creation". The essence of strategy will become more synonymous with innovation, with every executive and even every employee needing to possess strategic thinking, closely integrated with product technology. Zeng Ming also has prospects for talent: the future most needs creative talent with multi-dimensional perspectives and unique specialties, because AI will lower the threshold of professional knowledge, and composite creative talent will stand out. He encourages the younger generation to engage in learning cutting-edge technologies such as AI while cultivating humanistic insights, in order to lead innovation in the era of human-machine collaboration.

In summary, Professor Zeng Ming's strategic thinking system has painted for us a new blueprint for the intelligent business era: enterprise strategy must have the foresight to follow trends, as well as the agility for rapid trial and error; organizational management must be people-oriented and network-collaborative, allowing organizations to self-evolve like living organisms; innovation methods must dare to break boundaries, make good use of new technologies, and transform uncertainty into growth momentum. Looking toward the future, this system of thinking will continue to guide enterprises in finding the right direction amid turbulent technological changes and achieving sustained prosperity. As Zeng Ming says: "It takes ten years to achieve greatness," only by seeing the major trends, adhering to the mission, and continuously innovating can one stand invincible in the wave of new business civilization.

Ordinary people have few opportunities to make decisions in life and work, and it is also difficult to practice and improve their decision-making skills. Most people's decisions rely on intuition, while rational decisions depend on processes. The book "Decisive" proposes a four-step process for rational decision-making — to increase the probability of making the best decision, we need to 1. broaden options, 2. test assumptions with facts, 3. step outside ourselves to see ourselves, and 4. prepare for wrong decisions.

1. Broaden Options​

People mistakenly think that making a choice is as simple as answering multiple-choice questions on an exam, selecting one from three or five options. However, the world is vast, and options are not limited to just a few. For example, an advertising design company may develop multiple design proposals simultaneously and combine useful elements into the final design outcome after each round of feedback. This not only increases work efficiency but also saves time costs in decision-making. Additionally, one can refer to the base rates of others' choices in similar situations. Sam Walton, the founder of Walmart, closely monitored competitors throughout his career to adjust decisions in a timely manner. As decision-makers, we should find the best solutions by creating more options and referencing others' choices.

2. Test Assumptions with Facts​

If practice is the only criterion for testing truth, then conducting experiments before making final decisions can relatively accurately estimate whether an idea will work. Many companies have evolved from hiring employees solely through interviews to requiring them to go through short trial periods, precisely to avoid the limitations of interviews and increase decision accuracy. A friend of mine tried staying overnight in a house before buying it and discovered that he could hear the train's horn, thus avoiding a significant mistake at a low cost.

3. Step Outside Ourselves to See Ourselves​

When decision-makers become too immersed in their own viewpoints, they often overlook external perspectives. Therefore, to assess the potential outcomes of a decision, one should investigate the objective circumstances underlying the decision. Consider evaluating options from a broader temporal and spatial perspective, such as Andy Grove pretending to be the new CEO entering through the front door and cutting the memory chip business; Kai-Fu Lee hypothesizing that tomorrow's headlines will report on his two choices — one being emotional but unjust, the other just but unfeeling, and then choosing to be just as a leader; Jeff Bezos imagining himself at 80 looking back, using the "regret minimization framework."

4. Prepare for Wrong Decisions​

When considering the outcomes of decisions, you should contemplate both the best and worst-case scenarios to understand your position. If the situation approaches the worst outcome, you can respond in a timely manner. Additionally, you can establish signals that make you aware of your actions, thereby weakening the inertia of behavior and correcting decisions promptly. Notably, to increase the speed of decision-making, Bezos believes that decisions are inherently unequal and should never be treated equally — reversible decisions should use lightweight decision-making processes.

When you know where you should go, it is too late to go there; if you always keep your original path, you will miss the road to the future.

Charles Handy makes an analogy as his road to Davy's Bar. Turn right and go up the hill when there is half a mile to the Davy's Bar. However, when he realized he was on the wrong way, he arrived at Davy's Bar already.

The growth curve is usually in an "S" shape, and we call it S-curve or sigmoid curve. To keep the overall growth rate high, you have to develop your second S-curve before it is too late to invest your time and resources.

Intel's CPU, Netflix's video streaming, Nintendo's gaming, Microsoft's cloud are all excellent examples of the second-curve-driving businesses.

How to find and catch the second curve takes vision and execution. You have to input more information and continuously sort them to identify the best opportunities. And then, once a chance identified, you need a reliable team to fight the battle and figure out whether it really works.

What makes you succeed may not make you succeed again. There is always a limit to growth. The second curve theory helps us reflect on why and how to embrace the change and live a more thriving life.

When you know where to go, it is often too late; if you always stick to the original path, you will miss the road to the future.

Charles Handy illustrates this with the analogy of "David's Bar": on the way to "David's Bar," you should turn right up the hill when you are half a mile away. However, by the time he realized he was going the wrong way, he had already arrived at "David's Bar."

Growth curves are typically S-shaped, which we refer to as the S curve. To keep the growth rate consistently high, you must invest time and resources to develop a second S curve while there is still time.

Intel's CPUs, Netflix's video streaming, Nintendo's games, and Microsoft's cloud services are all excellent examples of businesses driven by this second curve.

How can you discover and seize the second curve? You need to input more information, discern good from bad, and identify opportunities. Then, once the opportunity arises, having a strong team to tackle the hard work is essential to determine whether you have truly found the second curve.

The reasons that made you successful in the past may not lead to future success; growth always has its limits. The second curve theory helps us reflect on why and how to embrace change for a better life.

Technology

Market

Market

Leaders

Leaders

The Innovator's Dilemma

The Innovator's Dilemma

Challengers

Challengers

Dragonslayers

Dragonslayers

• The gravitational direction of technology is towards mediocrity: as technology inflates, excellent technologies tend to become mediocre, and mediocre companies adopt excellent technologies.
• The gravitational direction of the market is the Matthew effect: markets with a presence will grow larger, while those without will shrink.

The answer is: Amazon wanted to buy customers for its grocery service.

Background​

• Amazon's acquisition of Whole Foods = Apple's iPhone defeating Palm

  • Do not confuse goals, strategies, and tactics — Apple's strategy:
    • It was not about making phones but about producing personal computers
    • It was not about adding features to phones but about compressing traditional phone functions into one app
    • It was not about replicating the work of carriers but about leveraging its connection with customers
  • The iPhone is the most successful product in history = Amazon is the most dominant company in history

• Amazon's Goals

  1. Initially, Amazon.com aimed to become a leading retailer based on information products and services, starting with selling books.
  2. Then, Amazon declared, "Our vision is to be Earth's most customer-centric company, where customers can find anything they want to buy online."
  3. ==Amazon's goal is to gain a share of all economic activities==.

• Amazon's Strategy

  • For businesses: AWS. Assume that all commercial transactions will soon be completed online.
  • For customers: Prime. Assume that high costs and diverse choices are unsustainable. With Prime, customers will not consider other alternatives.
    • However
      • The grocery industry is the largest retail category
      • The grocery industry can continuously remind consumers that there are alternatives to Amazon

• Amazon's Tactics: Develop grocery services

Why Did Amazon Not Arrive at the Right Tactics?​

Books	Groceries
High inventory units = wide selection	Low inventory units (30k - 50k)
Standardized	Varied
Non-perishable	Perishable

Amazon's cost disadvantages in fresh produce

1. Once scale is insufficient, product spoilage will incur high costs.
2. Scale depends on the specific circumstances of each city.

Why does acquiring Whole Foods (rather than others) solve the business scale issue?

==Business fundamental component model + two basic points 1) High fixed costs 2) High returns==

• Deconstruct the infrastructure into Minimum Sellable Units (MSUs)
• These businesses themselves are the first and best customers of these minimum sellable units
• Resell the minimum sellable units

AWS's three-tier architecture

Service	Fundamental Component	S3, EC2, RDS, SNS, ...
Platform	AWS	High fixed costs + scale returns
Infrastructure	Modular Components	Data centers, servers, storage, switches, bandwidth

• MSUs belong to S3, EC2, RDS, SNS, etc.
• The first and best customer is amazon.com
• Resell MSUs to non-Amazon developers

Amazon.com's three-tier architecture

Service	Package	FDA, Amazon Pay, ...
Platform	Logistics Center	High fixed costs + scale returns
Infrastructure	Modular Suppliers	Manufacturers, third-party suppliers, etc.

• MSUs belong to FDA, Amazon Pay, etc.
• The first and best customer is Amazon's first-party e-commerce
• Resell MSUs to third-party suppliers

The insight here is that Amazon's existing grocery does not have a first and best supplier.

The Perfect Customer​

Placing Whole Foods into this framework, we can see that ==what Amazon did was not just buy a retailer, but also acquire a customer for its existing business==.

Amazon.com's three-tier architecture + Customers

Customer		All categories of food, delivery, restaurants
Service	Groceries	Meat, fruits, vegetables, dry goods, etc.
Platform	Logistics Center	High fixed costs + scale returns
Infrastructure	Modular Suppliers	Store brands, name brands, local suppliers, regional suppliers, etc.

Now, Amazon groceries can serve both Amazon Fresh and Whole Foods, and in the future, this foundational platform can also provide services to restaurants and other food-related entities.

Answer: Amazon wanted to buy a customer for its grocery services.

Background​

• Amazon acquiring Whole Foods = Apple’s iPhone beating Palm

  • Don’t misunderstand goals vs strategies vs tactics - Apple’s strategy
    • is not to build a phone but to build personal computer
    • is not to add functionalities to a phone but to reduce the phone to an app
    • is not to duplicate the carriers but to leverage their customer connections
  • iPhone is the most successful product of all time = Amazon is the most dominant company of all time

• Amazon's Goal

  1. Initially, Amazon.com’s objective is to be the leading online retailer of information-based products and services, with an initial focus on books.
  2. Then, it says "our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online."
  3. ==Amazon’s goal is to take a cut of all economic activity.==

• Amazon's Strategy

  • to enterprise: AWS. Assuming that all businesses will soon be Internet-enabled businesses.
  • to customer: Prime. Assuming that superior cost/and/superior selection are not sustainable. With prime, alternatives won’t be even considered by customers.
    • However
      • grocery is the largest retail category.
      • grocery is the most persistent opportunity for reminding users there are other alternatives.

• Tactics: develop grocery services

Why hadn’t Amazon figured out the right tactics?​

Book	Grocery
high SKUs = large selection	less SKUs(30k - 50k)
standardized	vary in quality
imperishable	perishable

AmazonFresh’s cost disadvantage

1. High costs of perishable items if not scaled
2. Scale needs to be based on cities

Why can acquiring Whole Food (not doing other things) solve the scale problem?

==Primitives model for business with 1) hight fixed costs 2) high returns to scale==

• decouple infrastructure into Minimal Sellable Units (MSUs)
• business itself is ==The First-And-Best Customer== of those MSUs
• resell MSUs to the outside

AWS Three Layers

Services	Primitives	S3, EC2, RDS, SNS, ...
Platform	AWS	High Fixed Costs + Returns to Scale
Infrastructure	Modularized Components	Data center, Servers, Storage, Switches, Bandwidth

• MSUs are S3, EC2, RDS, SNS, etc
• The First-And-Best Customer is amazon.com
• resell MSUs to non-Amazon developers

Amazon.com Three Layers

Services	Packages	FDA, Amazon Pay, ...
Platform	Fulfillment Centers	High Fixed Costs + Returns to Scale
Infrastructure	Modularized Suppliers	Manufacturers, 3rd Party Merchants, ...

• MSUs are FDA, Amazon Pay, etc.
• The First-And-Best Customer is Amazon first-party e-commerse
• resell MSUs to 3rd party merchants

The insight here is that grocery business has no first-and-best customer.

Perfect Customer​

After fitting in Whole Foods to the big picture, we can see that ==Amazon is buying more than a retailer - it’s buying a customer==.

Amazon.com Three Layers + Customers

Customers		Whole Foods, Delivery, Restaurants
Services	Groceries	Meat, Fruit, Vegetables, Non-perishables, ...
Platform	Fulfillment Centers	High Fixed Costs + Returns to Scale
Infrastructure	Modularized Suppliers	Store Brand, Name Brand, Local Suppliers, Regional Suppliers, ...

Now Amazon Grocery Services can serve AmazonFresh and WholeFoods, and then in the future restaurants or whatever can consume it.

==Economic Moat== refers to: A company's ability to maintain a competitive advantage over its rivals, protecting long-term profits and market share.

Elements that do not constitute an economic moat:

• Technology. Technology will ultimately be replicated.
• Extensive reading. ==Reading can only help one keep pace with others.== In the industry, everyone reads a lot of books; even reading more than others does not necessarily make you more competitive.
• Master's degrees or other degrees from top universities. These degrees often lead to high salaries, even if they are in stark contrast to what successful investors do.
• Experience. Some degree of experience is necessary to participate in the economic game, but in certain cases, this experience may not be helpful.

Elements that constitute an economic moat:

1. Economies of scale and scope. For example, companies like Walmart, Home Depot, and Lowe's.
2. Network effects. For example, eBay and Mastercard.
3. Intellectual property, such as patents and trademarks.
4. High customer switching costs. For example, Paychex and Microsoft.