The existence value of the company

In today’s era, people in the workplace come and go, people flow frequently, and a job for 10 years or 20 years is almost extinct.

Why are modern people so impetuous and uneasy?

Blame the employer.

Nowadays, if a large company with more than 2,000 people has lived for 10 years, it is only about 1/3; the average life expectancy of small and medium-sized companies is 2-3 years.

If the company does not live long, employees will either frequently quit or be unemployed frequently.

Nowadays, many industries have disappeared in less than 10 years. For example, the software industry and the P2P online lending industry have all had prosperity periods, and they are not faltering in 10 years.

The world is developing very fast, and even if a person enters in this industry in the middle of the day, it will be mixed for several years. Those who can’t get out of a field will be in a bad situation.

What kind of company can live longer, is there a more reliable standard of judgment?

A large scale, a hard background, a lot of talent, a lot of fans, and a lot of money for products can’t guarantee a company’s longevity.

For example, during the period when many P2P online lending companies suddenly emerged, scale, products, and users were not a problem.

However, the trend of the industry has changed. Some companies with special strength and state-owned enterprises have said that they will fall.

For many years, in the general concept of people, the company must be an entity, and only when the entity exists, the company can survive.

However, the author of A Brief History of Humanity, Yuval Hulari, rethinks some questions:

What exactly is a company? What does the company survive?

Is the company its product or brand? However, after changing the product, changing the brand, and even changing the industry, many companies are still there.

Is the company the funds and accounts receivable on its account? However, money can be spent, and many “negative assets” companies can survive.

Is the company its office space, employees and board members? However, the office space and the board of directors have been shuffled, and many companies are still there.

Even many company founders (including Apple, Uber, Twitter, etc.) are expelled by investors, do not affect the company’s actual operations, and even operate better.

So, what exactly is a company?

The answer is that the company is a solid consensus.

The consensus of stability does not exist, and the entity is useless.

Here, I want to explain the value of modern companies from the following two aspects:

What kind of business entity does the company condense?

Will this business form disappear in the future?

Understanding the true value of the company can truly integrate into the business value creation of this era.

1. What kind of business entity does the company have?

If the company is only regarded as a division of labor, then there have been two fissiones in the company’s evolutionary history: one is KPI-driven, and the other is organizational empowerment.

KPI drive, survival of the fittest

If you have a long-term career, you may find a lot of “reverse elimination” phenomenon, professional staff in many companies.

For example, engineers, designers, accountants, etc., often flow and lose a lot, and some mediocre employees with average ability can survive for a long time.

Recently, I specifically asked a friend who started a video website to ask this question.

He told me that because professionals are often very arrogant and stubborn, they are not willing to come out in their own field.

(This may be an excuse, high professional income, high expectations, expectations and results often have a gap)

For example, an engineer who is responsible for developing a video product often looks at the work with a professional eye.

If someone asks him, how much can a video be watched once? Developers are often unclear.

It may be that the company does not have a good feedback mechanism. It may be that many employees are unwilling to worry about these practical problems because they are focused on professionalism. It may also be that the marketing and promotion links are not well coordinated.

In this way, there are only three results:

The product does not make money, is removed from the shelves, and the relevant employees are transferred to do lower-end work;

The relevant employees were directly eliminated and unemployed;

The boss is kind and soft, the company’s losses are dead, and everyone is still unemployed.

This is not a good result.

If the background of your company culture is the survival of the fittest, employers will directly ask these professional staff to leave.

Technology companies that consider this logic are everywhere, including Microsoft, Facebook, Tencent, Jingdong Mall, and so on. Is this a smart approach?

Silicon Valley often holds CTO (CTO) gatherings, gathers R&D directors of various technology companies, and exchanges future technologies and innovation directions.

Perhaps you will find that a large number of those CTOs are from Microsoft.

Many of them are passively resigned in the oppressive atmosphere of “the last elimination”. If they have not left, how powerful Microsoft is now.

Results-oriented, collaborative efforts, managers want to achieve this effect.

In my opinion, this is more of a cultural aspect. The corporate culture based on the survival of the fittest is no longer suitable for the changing situation of this era.

Applying pressure with rules and systems is always simpler and more rude than careful guidance at the cultural level, which is more likely to have negative psychological effects.

Second, organizational empowerment is becoming mainstream

Compared with the company culture of the survival of the fittest, organizational empowerment is often more benevolent and more effective.

In recent years, there have been two of the most successful catering companies in China: one is Haidilao, which was publicly listed in Hong Kong last September. Although the market environment is not good, the market value is close to 100 billion Hong Kong dollars.

One is Xibeiyu Noodle Village, with 20,000 employees. The executives have already come out to say “never list” and “forever”. why?

This logic still makes sense.

Xibei tried to spend the money on the employees and thought of each employee as a product. “Where did everyone come to Xibei, what did it become after Xibei? Xibei is to make people into fine products.” ”

The interests should be inclined to the front line, tend to the grassroots level, and play the “game of the struggler” rather than the game of capital. Struggles rely on labor to obtain returns, and “profit-seekers” can always receive dividends through a shareholding.

Xibei can make 20,000 employees maintain a consistent mental state and action effects, and contribute to the company culture of organizing empowerment.

This is consistent with the philosophy of IMS. I am convinced that it is the responsibility of the company to be responsible to the employees. You are willing to spend money on “shaping employees” and spend an extra 200 million yuan, often generating a return of 400 million.

When the company is small, it is hoped that wages will be paid and employees will have a good life. When the company is medium-sized, it is hoped that it will be responsible to employees and customers.

Now that the company is bigger, its responsibilities to employees, customers and investors are getting heavier. To have a stronger organizational empowerment, drive the company’s sustainable development.

Third, the company’s business form, will the future disappear?

In the future, mechanical and repetitive mental work will be replaced by artificial intelligence (AI). If the machine is more agile and smarter than people, then where is the value of people?

It is about creativity, insight, and perception of customers. It is based on these capabilities of employees to form a corporate culture and empower employees.

Empowering does not mean decentralizing power, nor does it bring uncertainty to management. Empowerment is actually an open, transparent and candid corporate culture.

Specifically, there are two key points in organizing empowerment: one is to open up frankly to activate team strength; the other is to promote information transparency and efficient feedback.

Open and honestly activate team strength

For example, Google CEO Larry Page found out that the advertising promotion page had a problem. He printed a demand slip, posted it on the bulletin board, and turned it home.

Five search engineers who couldn’t get in touch with the advertising department’s gossip, spontaneously used weekends to work overtime to study a new program, and finally the new program became a multi-billion dollar business.

What are the motivations for these engineers to take the initiative to work overtime on weekends, and they are not doing their own jobs? Because they know that their work will be “seen”, seen by the boss, and seen by all colleagues.

Google is an open large studio (or work platform), rather than a division of labor system according to different types of work and different pay.

The biggest confusion that many people have encountered in the workplace is that they are confused about the results of their work. How much value has they produced? Have they been seen?

The free atmosphere and spontaneous environment created by Google CEO Larry Page gives everyone the opportunity to prove their strength. This kind of openness and frankness is a good organizational empowerment.

Netflix was originally a video website. Today it is a world-class streaming media giant. The market value has surpassed that of Disney. The classic American TV series “House of Cards” was launched by Netflix.

Netflix CEO Reed Hastings has built a wonderful “adult culture.”

There is a “hidden rule” inside Netflix that only accepts adults. I believe that employees will be responsible for their own time. I believe that employees are adults who have the ability to make time arrangements.

Therefore, Netflix allows colleagues to decide when to take a vacation and not to apply at the first level before the vacation.

As a result, the company’s work arrangements have not only been confusing, but on the contrary, there has been no special change in everyone’s vacation behavior. However, this open and candid corporate atmosphere has been established.

Adults don’t just complain about problems, they solve problems themselves. Adults understand the importance of discipline and understand self-discipline. Adults know where they are going and are willing to work hard.

Promote information transparency and efficient feedback

American astronauts will definitely go to church to pray before God.

Not because of superstition, nor about faith, but because of the uncertainty in my heart.

why? Manned space flight is a huge project promoted by the cooperation of the whole country. It is opaque between different departments (necessary for confidentiality), and it is difficult to avoid accidents of various crashes, loss of control, and explosions.

In 1999, NASA spent $125 million to build the “Mars Climate Orbiter” crash. Later, it was discovered that the reason was that different departments used different units of measurement.

Prior to this, the Apollo 1 astronauts were trained in the spacecraft, and an accidental fire broke out. All three astronauts were killed.

When designing the spacecraft, it was specifically considered that there was a possibility of fire, and the spacecraft used non-combustible materials.

However, I never imagined that in order to reduce the weight of the spacecraft, pure oxygen was used in the cabin, which would be much lighter than using air.

This results in materials that are not flammable, become flammable in pure oxygen, and release toxic gases.

Those who participate in the manufacture of spacecraft are the top smart people in the world. Do they understand these simple truths? No.

Because they work in different fields (different companies, different institutions), and rarely think about what their work will be together.

The more extensive the organization and management, the “interface zone” between departments and departments, the more unimaginable the risks are unimaginable.

If the organization is opaque, “interface failure” will occur. For example, many medical accidents occur during the connection between the hospital’s emergency room, operating room and inpatient department.

This is also why some social apps can be used to collect over 100 million users, while some social apps run thousands of people instead.

Absolutely transparent, absolutely honest, and get real and efficient feedback, this is the best empowerment.

This is one of the most respected points of the Principles author, Ray Dalio, and believes that one of the most valuable insights in the business world is to establish a transparent and honest corporate culture and to tell employees the most cruel truth.

Many companies are getting bigger and bigger, and the division of labor becomes very detailed. Everyone cares only about their own parts, and their vision is artificially obscured.

But I don’t know how my work is being used by the company, and what kind of economic value will be generated.

Just like in a football game, only let the player see the lawn under his feet, without letting him see the whole picture.

Fourth, write at the end

The organizational form of Google and Netflix has surpassed the limitations of the company structure and evolved into a large studio and empowerment field, thus achieving a rapid rise beyond the understanding of the average person.

The manned spaceflight project is beyond the organizational form of the company, research institutions, universities, and the military. It has achieved a high degree of cohesion of resources and intelligence and created a miracle of mankind.

So, as long as you zoom in, any value creation is not limited by the organizational structure you are in.

Look at the moment:

Before 2014, you and your friends around you did not work at this company, or work at that company; today, many do not rely on this platform to make money, relying on that platform to make money.

Net red relies on all kinds of live broadcast and short video platforms. The media people rely on Weibo and WeChat. The shop owner relies on Taobao, making fast food, sending and selling, relying on the US group, and so on.

They don’t need to go to work, and no company can bind them.

So, will the company’s commercial species die out?

My conclusion is that as long as there is a strong consensus, information and data flow smoothly, and small companies and large platforms can be realized.

Do you know how many employees does Apple have? The public data is 13-14 million, which is actually 20 million.

The people who work for Apple, not just Apple employees, have developed software for Apple Systems, with nearly 20 million people worldwide, not counting the number of people around the Apple hardware industry chain.

Do you know how many R&D personnel are there in Procter & Gamble? 25,000. Two-thirds of them are “outside brain” experts who do not have to go to work.

As long as you build a “consensus platform” that is large enough, the information and data networks are widely distributed, and you don’t need a very large company organization.

The existence value of the company is to build consensus and form an efficient and reliable organizational empowerment.