Wealth,  Tech

Explosive line: let the business grow exponentially

  There is no CEO who does not want his business to explode. Growth maps can design growth lines, and companies can do additive growth. However, in today’s digital age, CEOs prefer to overtake on curves or change lanes to obtain multiplicative growth, or even geometric growth. This is the explosive line.
  Here I first define the “breakout line”. The so-called “explosion” is different from the linear growth model. It is a non-linear development, a leaping development, and a geometric progression. Therefore, the first characteristic of the explosion line is fast. Companies with an explosion line It’s typical Fast Company. The second feature is fission. This kind of fast is different from the traditional fast. It has the logic of exponential algorithm.
  So, how to design the outbreak line of the enterprise?
Digitization is the necessary gene of the outbreak line

  In the school motto of Cheung Kong Graduate School of Business, “Taking Power, Knowing Dao, and Excellence in Skills”, Momentum is the first. Today’s enterprises face the biggest potential energy is digitalization. If enterprises do not press the button of digitalization, it is impossible to achieve explosive growth.
  Let’s take a look at the companies with a market value of over 100 billion U.S. dollars established between 1916 and 2004 (see Table 1 on the next page). If we divide these companies according to their digital genes, we will find a surprising discovery: companies founded after 1987, If there is no digital gene, it is impossible to reach a market value of 100 billion yuan, such as Amazon in 1995, Google in 1998, Alibaba in 1999, and Facebook in 2004. These companies with a market value of 100 billion US dollars all have digital genes.
  Looking closely at the chart of companies with a market value of 100 billion US dollars, we need to redefine the company. The traditional division method is outdated. It is actually very difficult for us to define what industry an innovative company is engaged in today. Here I propose another division method. Under the wave of digitalization, there will only be three types of companies in the future. The first type is native digital companies, typically companies such as BAT (Baidu, Alibaba, Tencent), Google, Amazon, and Facebook. Since their birth, such companies have been in the form of the Internet and have accumulated data. In the future, they can evolve to artificial intelligence based on the accumulation of big data. The second type is regenerative digital companies. These companies include Apple, shared bicycles, and Xiaomi. The characteristics of these companies are that they are originally engaged in traditional businesses, but the founders have made them Internet-based and digitalized, making these companies have acquired digital characteristics. , Of course, the valuation of these companies is 10 times or even a hundred times higher than that of traditional companies in the same industry. The third type is traditional companies.
  In the context of digitalization, the application of new technologies is getting faster and faster. McKinsey did an interesting study. The study calculated how long it would take for a product to accumulate 50 million users across generations. Among them, after the invention of radio, it took 38 years for 50 million radios to be put into use around the world; it took only 13 years for the same 50 million TV sets to enter thousands of households; it took only 3 years for the Internet to reach 50 million Internet users. It took only 1 year for Facebook to reach 50 million users; it took only 9 months for Twitter; in 2016, 50 million users downloaded “Pokémon” (unofficial translation) for Pokemon).
  Digitization is a gene, but not all digital companies can achieve exponential growth. The key lies in whether they have mastered the ability to design explosive lines. There are two typical ways of business outbreak: product outbreak and communication outbreak. A good business outbreak line should take both approaches into consideration.
Design product explosion line

  Let’s first look at the product outbreak line. Good products are the foundation of growth, but the key lies in how to create a product with explosive characteristics. I think that to create a product explosive line, we must do four elements well: outlet, innovation, efficiency, and speed.
  Outlet: a great opportunity to double the user experience
  This outlet does not refer to the outlet of capital, but the outlet of the market. Enthusiasm in the market is a great opportunity to improve the user experience. Why do you want to double the user experience? Consumers can feel the double or triple increase, but only 3% or 5% increase, consumers can’t feel it, so the user experience must be doubled. What is a big opportunity? The big opportunity is the potential market size of this outlet, which determines whether you can attract talents, resources and capital. Let’s take Little Red Book as an example. Founded in 2013, Xiaohongshu has developed into the world’s largest consumer word-of-mouth library and community e-commerce platform through deep cultivation of UGC (user-generated content) shopping and sharing communities. Today, Xiaohongshu has more than 200 million monthly active users , becoming a must-have “shopping artifact” for young consumers in more than 200 countries and regions.
  Obviously, Xiaohongshu has caught up with the trend. With the continuous improvement of material living standards, the new middle class began to pursue overseas travel and overseas high-quality goods, but the lack of information made them encounter many difficulties when shopping abroad. Starting from this problem, Xiaohongshu creates an image of “overseas shopping consultant”, provides users with overseas shopping strategies, solves the shopping pain point of “where to buy and what is worth buying”, and brings great convenience to users. We can even quantitatively evaluate that Xiaohongshu must have doubled the savings for users in terms of shopping decision-making time such as checking strategies, searching maps, and reading translations, as well as costs such as transportation and taxes, otherwise it would not be called “Shopping artifact”.
  Innovation: Seize the technology and model
  When you find a good opportunity that can double the user experience, it can be said that you have “the right time”, but there is also a necessary pusher for the emergence of the explosive line, which is “geographical advantage”: The supply-side big explosion innovation supported by technology or the recombination and allocation of resources with business models. Let’s focus the spotlight on the company Douyin.

  The success of Douyin is inseparable from a strong technical background. Many times, people can predict the direction of the next outlet, but until the technology is mature, people can turn it into a commodity that truly doubles the user experience. One of the technologies driving TikTok’s success is image processing. A typical representative is the “Dancing Game” function launched by Douyin in December 2017. This function made Douyin once ranked first in the free list of the Apple Store. “Dance Dance Machine” is developed by Toutiao AI Lab, which uses human body key point detection technology to realize the adaptation of user actions and target actions, allowing users to experience “somatosensory” games with a lower threshold. Once this game was launched, it quickly became popular because of its playability and entertainment.
  The second technology driving Douyin’s success is the intelligent recommendation algorithm. Douyin has inherited Toutiao’s excellent algorithm tradition. When a user uploads a video, the video will first enter a small traffic pool and be seen by some people. If the video has high comments and likes, it will be further viewed Large-scale promotion, and so on, this makes a video have a strong vitality. This method can ensure that everyone’s work will be seen by at least a small number of people, and if the content is excellent, they can become famous in this way. Different from other video sites that rely on big V (Internet users with many fans) to repost videos to increase traffic, this decentralized model allows more ordinary people to have a fairer channel for becoming famous, so Douyin has gained more people’s favor.

  In addition to the core technology innovation of enterprises, when the industry technology matures to a certain extent, technological development will also promote the innovation of business models. Explosive products realized through business model innovation often integrate genes with strong spread into the business model, such as Pinduoduo.
  Efficiency: Be wary of hidden traps In
  most cases, using innovation to seize opportunities to improve user experience is equal to more than half of the success. Unknowingly fell into the growth black hole. The O2O industry that achieved explosive development in 2014 is a profound lesson. At that time, companies that achieved rapid growth through large-scale subsidies, such as companies that provided O2O services such as door-to-door massage, door-to-door cooking, and door-to-door haircuts, have almost all closed their doors today, or have undergone business transformation to barely survive.

  On the surface, they doubled the user experience, chose a large enough track, seized opportunities through business model innovation, and achieved explosive growth in users in a short period of time, but when subsidies stopped, the growth It also stopped. In essence, this is because these enterprises have not improved the efficiency of the industry, and even caused a decline in efficiency. Wei Zhe, the former CEO of Alibaba, once analyzed Helijia: when providing door-to-door service, artisans can make 2-3 orders a day, but if they are in the store, they can complete 6-8 orders a day. At this time, although O2O saves rent, the output per person per day is declining, and the efficiency of the entire industry is also reduced. Obviously, the reduction in efficiency means the increase in various costs, which fundamentally blocks the road to explosive growth, and will only fall into the vicious circle of doing more and losing more, accelerating the death of the enterprise, and swallowing up the profit zone.
  Fast: capital-driven
  In explosive growth, “fast” is extremely important, and it means an overwhelming investment of troops. A big trend is often pursued by a group of innovative talents. Whoever has more resources and can occupy the market first will have the right to win. For example, in the field of short music videos, musical.ly (a music short video community application) actually has a first-mover advantage. It was the first to go online in the United States in 2014. In July 2015, it was listed on the “General List” of the Apple Store in the United States. and “photography and video” apps topped both lists. But in the Chinese market, its business development situation is not ideal. Douyin, which was only launched in September 2016, came from behind and firmly occupied the Chinese domestic market through a series of efficient version iterations and operational activities. At the beginning of 2017, musical.ly realized the importance of localization. When China began to promote the localized short video product muse, the best time has passed. At this time, Douyin has quickly seized the domestic music vertical short video market . On November 10, 2017, musical.ly was acquired by Toutiao for US$1 billion.
Design Communication Breakout Line

  After talking about the product outbreak line, let’s talk about the characteristics of the communication outbreak line. The communication burst line is suitable for both digital companies and companies that have traditional businesses but want to communicate through digitalization.
  If the business type of the enterprise is non-digital, then the communication outbreak line becomes the only way for the business to explode, and it should arouse the focus of the enterprise. The design of the outbreak line of communication requires three elements: creating social currency, leveraging head traffic, and spreading social viruses.
  Creating Social Currency
  Social currency is a concept derived from socioeconomics that measures the propensity of users to share content related to a brand. services, so as to achieve the purpose of word-of-mouth communication. It can also be understood as the consumption of knowledge reserves by two or more individuals in a society before gaining a sense of identity and connection. For example, when everyone plays the same online game, or you participate in the discussion when others are talking about popular movies, this is the consumption of social currency. Social belonging and connection to others are products that social currency buys. Social currency is a weapon that can effectively open up social chains, and can quickly split the products and brands of enterprises.
  In essence, Douyin is a good social currency product. It is a powerful short video production software with complete functions and a large number of music, filters, beauty, and special effects for users to choose from. Moreover, compared with competitors, Douyin is simple and easy to operate in terms of user experience-users can directly implement functions such as setting music, editing videos, adding special effects, etc. in the software, and can also use simple templates and function buttons to help users complete Effects that could not be achieved before, such as reverse restoration, etc. Whether it’s funny, talent or travel experience, Douyin users can create videos that suit their own personality through the software. This simple operation and unique functions make the product itself have high-perception characteristics, and also make Douyin’s user content They have all become social currencies.
  Social currency means that people will judge whether their behaviors on social networks, such as forwarding, sharing, and likes, can increase others’ positive judgments on themselves. If the products or marketing methods you design on the Internet can be effectively implanted with social currency, your product will have a chance to go viral, so the capture of social currency will make your products, ideas, and behaviors invade and spread like viruses. spread.
  Leveraging head traffic
  In this explosive social fission, companies must also seize head traffic. In May 2017, Douyin began to cooperate with celebrities to promote products; at the end of July, Luhan’s new song “Zero Boundary Point” landed on Douyin. At the same time, Douyin also sponsored “The Rap of China”; in August, Douyin Yin landed on “Happy Camp” and held the first “IDOU Night” to start the expansion of offline activities; at the beginning of September, Douyin and Mobike realized cross-field cooperation, appeared on the “Daily Upward” column, and at the end of the month and love B&B, Chevrolet and Harbin Brewery collaborated to shoot the first brand video advertisement. On November 10, 2017, after Toutiao acquired musical.ly, it merged with Douyin. At this stage, Douyin focused on young people. By sponsoring a series of programs that young people are interested in, it not only established the tone of its products, but also quickly pushed the products to the target audience, thereby achieving user doubling.
  Spread of social viruses
  If the first five years of the mobile Internet have been releasing traffic dividends, then when the traffic dividends begin to dry up, social dividends may become a sharp edge to help companies release outbreaks.
  The core DNA of Tencent lies in social networking. Based on social data, it designs a set of social gravitational index, which reflects the attractiveness of an enterprise to its users. Tencent calls it “social performance”. Social function is composed of four elements, which are social circle index, friend circle index, fan circle index and social gravity. According to Tencent’s data test, social performance is highly related to the company’s current market share and future growth potential.

  The rise of the outbreak line of communication often has the characteristics of “contagion”. “Contagiousness” can be defined as “whether it can spread like a virus”, that is, like a virus, it has the characteristics of high link, high association, and high growth, and the social chain is like a channel for virus transmission. Douyin has a strong social nature. When Douyin users publish videos, they can add tags (labels) to participate in corresponding challenges, so as to discover users with the same preferences. Douyin’s functions of following, liking, and leaving messages are also convenient for users to choose their favorite groups. After adding followers, they can also see their exclusive updates in the “Follow” column, and the homepage will also have pushes about their videos . In addition, the system will also recommend people you may know through the people you follow, so that people with similar interests can build their own communities. This kind of high link releases the fission growth effect of social relations, and carries out directional diffusion through big data.
  Today, many traditional companies start marketing through Douyin. In essence, they expect to create an explosive line of communication. “Victory in one battle” was mentioned to a very high level in the ancient art of war. The so-called outbreak must integrate business into “time, location, and harmony of people”, but in specific operations, the general laws mentioned in this article can also be used. Stones from other mountains can be used to attack jade, readers and friends can try to start designing your business outbreak line!

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