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Inanimate management system makes enterprises more vital

  It is the simple ideal of an entrepreneur that an enterprise can develop efficiently and with low risk, so as to realize the longevity with strong vitality. Many entrepreneurs with dreams want to build a century-old or even longer-lived enterprise. It turns out that businesses do have longevity, for example, the Japanese Kongo-gumi is a construction business that has a history of more than 1440 years and set a Guinness World Record.
  The development of an enterprise needs talents, and it is hoped that the enterprise with strong vitality is even more so. When it comes to “need”, it is necessary to distinguish between “dependence” and “dependence” which have similar meanings. “Depending on” refers to expecting (other people or things to achieve a certain purpose); “depending on” refers to being unable to be self-reliant or self-sufficient without other people or things, or that various things or phenomena are mutually conditional and inseparable . Obviously, “dependence” is much deeper than “dependence”.
  In the current Chinese business world, many companies rely on individual talents. Some founders are the company’s chief sales representative or chief product development expert. Without their company, there would be no orders or no new product development; some companies need to rely heavily on individual “technical gods” other than the founders to operate normally. Or “marketing bulls”. These situations are understandable in the initial stage of entrepreneurship, but after the gradual expansion, the enterprise did not start to establish a scientific management system in time, thus forming an inertial dependence on individual masters.
  So the question arises, can an enterprise that relies on people realize the beautiful ideal of everlasting business?
  In fact, relying on individuals often brings harm to enterprises, and many enterprises have learned a profound lesson from this. From a biological point of view, life refers to the activity ability of an organism. The most basic feature is that it can continuously exchange substances with the surrounding environment through metabolism. From this point of view, the management system has no life, but human or anthropomorphic. Businesses have life. In addition, if a management system has life, it means that it has life, old age, sickness and death, so it will eventually die. The management system can be abstracted and copied to other enterprises, and can be independent of the life of the enterprise, so it will not die, so it is “inanimate”.
  From a management point of view, an inanimate management system means that its normal operation does not depend on anyone. In the history of management development, management masters have made many useful explorations on inanimate management systems: Fayol, the “father of modern management”, proposed fourteen “general management principles” and five management functions, so that management skills can be passed through Education is obtained, so it can be inherited and applied to various fields, laying the foundation for the management system not to rely on people. “Father of scientific management” Taylor put forward the principles of scientific management, so that management can be replicated without relying on manual workers. Drucker, the “father of modern management”, proposed that a good management system can minimize the impact of managers’ personal characteristics on the organization, so it can not rely on knowledge workers (especially managers) individuals. Ciampi and Hamer proposed business process reengineering, advocating that enterprises should be organized according to processes rather than functions, so that enterprises can operate with high quality and efficiency without relying on people. The research and exploration of management sages has laid a solid foundation for enterprises to build an inanimate management system and get rid of their dependence on people in practice.
  The lifeless management system can help enterprises to achieve automatic and efficient operation, rely on but not rely on individual talents, reduce risks, and make enterprises have longer lifespan and more vitality.
  Human beings have gradually entered the digital age. How to combine and use digitalization to build an inanimate management system also has strong practical significance.
How to establish a lifeless management system?

  The author summarizes the core methodology of building an inanimate management system in the digital age into a criss-crossed model, which may be called the “vertical and horizontal model”: horizontally realizes the whole process of business, and vertically realizes digital operation and decision-making, as shown in Figure 1. .
  Horizontally realize the whole business process and connect the typical business process of the enterprise, including R&D, marketing, sales, supply, production, delivery, service and other links.
  ”Pull” in operation and management is relative to “push”. It is triggered by a single point and only based on changes in the state of its own internal links to make decisions about the input of physical objects or knowledge, so as to carry out the management control of the next step. Way. In layman’s terms, pull is the relationship between the front and rear links, that is, the previous link realizes “you ask, I will give it; I will give as much as you need”, so as to establish a precise relationship between the front and rear links. linkage. In contrast, push is “whether you need it or not, I will give it to you”, even if the latter link is not needed at the time, the former link will pass on the object or knowledge after the completion of its own work, and the quantity is not strict The rules are rather arbitrary.

  Therefore, only by creating value for customers and connecting the entire business process, it is possible for relevant departments to shorten the delivery cycle and improve operational efficiency by improving management, so as to achieve lean and agile operations, and respond quickly to meet the fast-changing market demands. , to serve the front-line combat, so it is possible to truly be customer-centric and user-oriented.
  ”To get rich first build the road”, road access is the foundation, and the unimpeded car on the road is the goal. The level of “pass” can be divided into multiple levels. The foundation of an enterprise’s survival and development is to create value for customers. Creating or not creating value, how much value is created, how fast and good the value is delivered, and how high is the cost for customers to obtain value are all inseparable from the realization of “communication”, and can correspond to all levels of “communication” among. At present, the speed of product innovation is faster, the enterprise operation capability is stronger, the quality is higher, the delivery is faster, and satisfactory profits can be obtained. In the future, the company’s own internal strengths such as quality, efficiency, capital turnover, and asset utilization will become more solid step by step, which will make customers more satisfied and willing to cooperate for a long time, so that the company can achieve long-term efficient growth. At the same time, it can also form a better brand value. As a result, a positive cycle is formed, which makes the company more comprehensive and core competitiveness, and finally makes the company long-term stability and long-term development. The level of “communication” truly depicts and reflects the level of operation and management of an enterprise. It is the touchstone of the theory and method of enterprise operation and management, and a “mirror mirror” for “flickering” that cannot be implemented.
  The purpose of connecting should always revolve around creating value for customers. The departments, processes and people that cannot directly or indirectly create value for customers are basically redundant; it must focus on value creation to simplify the organization and process; In the process, it is necessary to gradually standardize and simplify, to improve the ability of timely service, and to reduce the period cost and management cost.
  Regardless of whether it is digital or not, it is necessary to create value through business. Pulling through business flows is an eternal blue ocean, which not only creates value, but also has high cost performance, laying a solid foundation for the inanimate management system.

  Vertically realize digital operations and decision-making For many companies, digital transformation is changing from an option to a must. In the process of digital transformation, although leadership, corporate culture, organization and talents are also more important, processes and data are more directly and closely related to it. As far as the process is concerned, it needs to be pulled horizontally, which has been analyzed above.
  As far as data is concerned, prior to digitization, information systems were inherently lagging reporting systems, and the value of data was underutilized. In the process of digitization, in order to maximize the value of data, three stages need to be covered, from data generation to digital operational decision-making. The first stage is to generate and connect. The main task is to clean data, improve data quality, and reduce error correction costs; make data truly reflect business and reduce operational risks. The second stage is aggregation and connection, that is, to connect the entire data process, improve the efficiency of business operations, and enable the upstream and downstream businesses to quickly transfer and share data and information, laying an important foundation for fast and accurate decision-making. The third stage is digital operation and decision-making. In this stage, the business status is transparent and visible, which can not only provide decision support based on “facts”, but also realize business automation with the help of artificial intelligence, gradually replacing manual judgment, and can also discover new market opportunities based on data to help products. or service innovation.
The cornerstone of Huawei’s organizational vitality: lifeless management system

  In this article, Huawei is used as an example to analyze how enterprises build inanimate management systems.
  The main achievements of Huawei’s lifeless management system began around 1992, when Huawei began to attach importance to not relying on people and initially got on the right track of development, until 2019, when the normal development track was distorted after being suppressed by the United States and the lifeless management system was initially established. , sales increased from 100 million yuan to 858.8 billion yuan, and per capita efficiency (per capita sales) increased from 370,000 yuan to 4.43 million yuan (as shown in Figure 2). While sales increased by more than 8,000 times, per capita sales revenue also increased by more than 10 times. The dashed line in Figure 2 is a fit due to the lack of data on the number of employees for a small number of years.
  In addition, some core executives retired or resigned due to age and other reasons, which did not have a major impact on Huawei’s business, indicating that Huawei’s management system can basically achieve independence from individuals.
  Sales and per capita efficiency have increased rapidly at the same time, and the management system has also initially gotten rid of its dependence on people, which proves from the side that the inanimate management system makes Huawei more viable.
  The main implementation process of Huawei’s lifeless management system is horizontally to realize the whole process of business.
  Ren Zhengfei has a deep understanding of “pull”. He is quite familiar with and agrees with the pull-type thinking in Toyota lean management, analyzing and solving problems based on the scene, believing in the creativity of front-line employees, and giving them sufficient authorization.
  While Huawei is improving its management, it also spends a lot of money to introduce external management consultants, “professional things, let professional people do it.” These external “think tanks” have contributed to Huawei’s rapid achievement of international standards in management. For more than 20 years, Huawei has spent tens of billions of dollars in reform, a considerable part of which has been used to facilitate the entire business process. The most representative of which are three projects whose names begin with I, namely IPD (Integrated). Product Development (Integrated Product Development), ISC (Integrated Supply Chain, Integrated Supply Chain), and IFS (Integrated Finance Service, Integrated Financial Service), helped Huawei to condense the “scattered sand” and formed several platforms, which made Huawei move towards strict, orderly development.
  Implement Integrated Product Development (IPD). Before the start of IPD in 1999, the most prominent problems in Huawei’s research and development were that the development cycle was long and uncontrollable, and the failure rate of the developed products was high. Therefore, the waste of resources is serious, the R&D cost is high, and the customer satisfaction is also low.

  Under the guidance of IBM, Huawei has established a cross-departmental R&D team covering R&D, marketing, production, procurement, finance and other departments. Representatives of each department participated in the entire product development process. In the R&D process, the R&D process has been optimized, and the process has been changed from serial to parallel, so that team members can do the product development work well at one time, avoid rework, improve the development quality, and shorten the development cycle. The workflow and templates have been standardized, which not only improves the efficiency and quality of communication and collaboration among project team members, but also enables newcomers to get started quickly. In terms of system, by requiring all projects to submit resource and technology needs assessment reports at the beginning of the project, Huawei’s technology development and product development began to be separated, and a technology management system was truly established. In terms of evaluation, an evaluation system based on market performance has been established, so that all departments including R&D are jointly responsible for the financial results of products, and the thinking is unified to be customer-centric.
  Ultimately, IPD shortens product development cycles, reduces product failure rates, and improves customer satisfaction. In addition, IPD gives Huawei and important foreign customers a “communication language”, which is more conducive to gaining trust and cooperation opportunities.
  Implement integrated supply chain (ISC) changes. Before the ISC reform, Huawei’s order delivery rate and inventory turnover rate were only about 53% and 38% of the international average, respectively, and the order fulfillment cycle more than doubled.
  IBM instructed Huawei to analyze 78 existing problems and optimize the five major processes of sales, planning, procurement, production and delivery. By optimizing the sales process, order information is more integrated and transparent; customers can choose from more product portfolios; contract processing is faster, and commitments to customers are easier to achieve. By optimizing the planning process, the high-level strategic planning and business plan can be refined into the operation plan of each link, the basic data of the plan is more accurate, and the plan transmitted to the production department is more feasible. By optimizing the procurement process, it not only guarantees supply, reduces inventory and costs, but also initially establishes a strategic partnership of mutual benefit and common development with core suppliers. By optimizing the production process, the supply of production materials is more timely, and the quality of production plans, product quality, delivery rate of complete sets of products, and production flexibility have been improved. By optimizing the delivery process, the application of logistics technology is more in place, the operation processing efficiency and space utilization are higher, and the delivery and installation are more timely. To complement it, IBM also assisted Huawei in integrating IT systems and making organizational changes.
  After the implementation of ISC, Huawei’s timely order delivery rate, inventory turnover rate, order fulfillment cycle and other indicators have significantly improved. For example, on average, Huawei expects customer satisfaction to increase by about 22%. By 2005, the order fulfillment cycle had been shortened from one or two months to only about two weeks, which was shortened by nearly three-quarters; the inventory turnover rate had increased by nearly 42%, and the cost had been reduced by nearly 37%. The immediate effects of the change are obvious. Correspondingly, Huawei’s customer demand response capabilities, flexibility, and service capabilities have been significantly improved.

  Provides Integrated Financial Services (IFS). An important basis for the reform of IFS is the “Four-Finance Unification” project provided by KPMG for consulting services, which enables the accounting systems such as travel expense reimbursement, accounting processes such as procurement processes, accounting subjects such as R&D expenses, and financial management responsibilities of representative offices. Unification enhances the headquarters’ control over regional managers and employees, preventing corrupt practices, but at the same time giving them the power to make autonomous decisions.
  In order to open up financial management and business management, and make finance better support and serve the business, Huawei asked IBM to guide the transformation of integrated financial services on the basis of the “Four Unification of Finance”, which is divided into two stages. The first stage is from 2007 to 2010, the main content is to run through the financial management process and business management process. The business covers research and development, marketing, delivery and other fields. The second phase started in 2010 and ended in 2013. The main task is to define the responsibility center and improve the project financial management ability.
  The transformation of integrated financial services has not only improved Huawei’s overall financial management capabilities and financial performance, but also laid a solid foundation for solving financial problems in the process of internationalization. For example, the cycle from product delivery to payment has been shortened from 30 days to 5 days. In addition, the bad debt rate has dropped significantly, the accuracy of financial data such as revenue and profit has been significantly improved, and both internal and external customers are more satisfied.
  In addition to IPD, ISC, and IFS, the following projects have also contributed to the integration of the entire business process.
  One is the lean management of Toyota’s retired directors. For more than ten consecutive years, Huawei has hired a retired director from Toyota headquarters in Japan, the birthplace of lean management, to guide Huawei’s lean management on the spot. The application field of Huawei’s lean management has also gradually expanded from the earliest production to the supply chain and other fields. The second is Accenture’s customer relationship management. Beginning in 2007, Huawei hired Accenture to initiate the transformation of customer relationship management (CRM), strengthening the process management from “opportunity to order to cash”. The third is the integration of multiple processes such as MTL (from market to lead), LTC (from lead to cash), and ITR (from problem to solution).
  After 2007, Huawei gradually experimented with letting people who could hear the fire make decisions, and later developed into an “iron triangle” organizational model. The “Iron Triangle” is a typical result of related processes.
  Huawei not only realizes the connection from innovation to cash and service within the company, starting from customer demand and finally customer satisfaction, but also cooperates with partners in the supply chain. In 2014, Huawei began to build a lean management-based supply chain with its core suppliers. After that, each year, based on the implementation of the goals in the previous year, a new annual chain-pulling theme was proposed and worked together with suppliers to complete it. For example, Huawei coached Longhua Foxconn to build a smooth supply chain, which quickly increased the production efficiency of a high-end mobile phone by 40.2%. The effect of smoothing is very significant.
  When interpreting the annual financial report, Huawei CFO Meng Wanzhou concluded that continuous management changes, including IFS, brought benefits to Huawei as high as 72% of the company’s overall revenue.
  The integration of all these business processes has objectively laid a solid foundation for Huawei to build an inanimate management system and achieve high-quality and efficient growth that does not depend on people, while laying a solid foundation for digital operations and decision-making.
  Vertically, realize digital operation and decision-making.
  In order to realize digital operation and decision-making, Huawei started data governance in 2007 on the basis of the preliminary process, which is divided into three stages, as shown in Figure 3.
  The first stage is data generation and connection. From 2007 to 2016, data quality has been improved through unified information architecture and standards, a unique and credible data source, and an effective data quality measurement improvement mechanism. Through business digitization and standardization, with the help of IT technology, the rapid transmission and sharing of business upstream and downstream information is realized. Through data quality measurement and continuous improvement, it ensures that data truly reflects the business and reduces operational risks.
  The second stage is data aggregation and connection, focusing on building a data base, aggregating enterprise-wide data and connecting data. Huawei’s data base is composed of two layers: data lake and data topic connection. It aggregates data inside and outside the company, and reorganizes and connects the data to lay the foundation for business visualization, analysis, and decision-making.

  The third stage is digital operations and decision-making, enabling fast and accurate decision-making by making business visible. Through the digitization and algorithmization of business rules, embedded in the business flow, it gradually replaces manual judgment. Data-based user insights, discover new market opportunities, and make data-based innovation a differentiated competitive advantage.
  The second and third phases started in 2017, and although they are still continuing, they have been largely completed.
  Huawei has built an inanimate management system by realizing the entire business process horizontally and vertically realizing digital operations and decision-making. These practices are not only replicated between different products and regions, but also in the supply chain. Copy, the effect is more prominent. Taking mobile phones as an example, through coaching, helping suppliers to horizontally connect business processes, and vertically carry out digital operations and decision-making, a lifeless management system has been initially established in relevant links, so that suppliers can reduce the need for more than 100 people for a mobile phone production line. To only need a dozen people, the effect is amazing. The list goes on and on, and the synergy growth data in Figure 2 is a synthesis.
  In the digital age, the lifeless management system makes Huawei and its upstream and downstream enterprises in the supply chain more vital.

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