How do companies respond to being “subverted”?

In a period of rapid change, the most feared by leading companies is being subverted.
Nokia, Motorola, Kodak, and some of Japan's home appliance giants were once prominent companies, but in response to the wave of subversion, they did not take the initiative, but they were passively coping, and eventually they ended up being beautiful and thin.
In the era of great subversion, is there a magic weapon to maintain the status of the king? Tencent gave the answer - it took the small project innovation team model, actively subverted from the inside, successfully launched WeChat, and continued to lead the wave of the times.

The company's leaders are most afraid of being subverted. Due to the rapid advancement of digital technology, their original market competition threshold is getting lower and lower, and new ventures are constantly emerging. Many industry leaders are likely to lose their leading position in a short period of time. Threats come from technology-induced changes in user demand and business models, and few companies are able to properly respond to threats and subversions. It is common for elephant-class companies to be arched.
Tencent is an exception. The company, which started in 1998 with a free communication software, became the first Internet company in China with a market capitalization of more than $100 billion. But with the full arrival of the mobile Internet era, the giants of the Internet era need to migrate from the PC side to the mobile side, which is a difficult one. Tencent's approach is to set up a small project team with a mindset of internal entrepreneurship, away from the influence of big corporate culture, and start to innovate like a startup. Finally, on January 21, 2011, WeChat launched the mobile internet product.
When the small bud of WeChat just emerged, many people in the industry thought it had no vitality. At that time, the communication tools represented by QQ were in full swing. But what is unexpected is that five years later, WeChat became the king of the mobile social world. The latest financial report shows that there are 762 million monthly active accounts. Tencent also relies on WeChat to continue to add value to the capital market. Why is WeChat born in Tencent? How is WeChat commercialized? Who can replace WeChat in the future?
At the beginning of 2016, Zhang Xiaolong, the senior executive vice president of Tencent, and the father known as WeChat, and his core team discussed the secrets of WeChat with the students of the Business Administration Doctor (DBA) of Cheung Kong Business School.

Insight into change, ready to come
WeChat is not imaginary, but prepared. Ma Huateng, Chairman and CEO of Tencent, said in an exclusive interview with the magazine that because new technologies appear every moment, the company should always be vigilant and track the most cutting-edge technologies on a global scale. The Internet is a rapidly changing industry. Tencent noticed that in just a few years, the Internet quickly moved from the PC to the mobile, and the tide of mobility will soon come. The company decided to build a purely mobile social tool.
What has changed in the mobile world? The answer is an accelerated era. Zhang Xiaolong said that in the past two years, the pace of development of all walks of life, especially the Internet industry, has surpassed the past. Things that have been done in the past 10 years are now only 5 years. The speed of implementation of many things has doubled. The rate of change in market demand has significantly accelerated. In the past, the analysis of market demand by enterprises is the current user habit. Today, the user needs to be done after half a year. The starting point of the two is quite different. Zhang Xiaolong said, "WeChat is a product that focuses on the future needs of users. We are more imagining the scenarios of future users to meet their future needs."
When WeChat went online, many people worried about whether it would affect QQ. Tencent’s highest decision-making level always had a strong sense of crisis. They have a consensus that instead of being subverted by competitors, it is better to subvert by the internal team of the company. Tencent's decision makers know that any product has its own life cycle, and the replacement is a natural law. No one can reverse this trend. The existence of this kind of consensus has made WeChat's R&D not encounter any resistance in the company and it is progressing smoothly.

Small team innovation model
If any enterprise develops to a certain scale, the management process will become more and more perfect, presenting a department-level management model, which has advantages and disadvantages. In the era of mobile internet, due to the great changes in the business environment, the drawbacks of bureaucratic organizations are more obvious. The main performance is that it is not able to respond to external changes agilely, internal innovation or entrepreneurial resistance, and lack of initiative of employees.
From the business characteristics of Tencent, it is also different from traditional enterprises. Chen Fei, deputy general manager of human resources and director of human resources at the Enterprise Development Group, said that the output of traditional enterprises is more tangible and easier to measure. Tencent's output is relatively intangible, and the product needs to be constantly experienced in the process of use. It measures effectiveness and reflects a user experience. In this process, the role of human beings is of the utmost importance. Therefore, Tencent's management reflects the small project team, decentralized, flat management and layer-by-layer iteration, ensuring that every employee is fully respected and authorized to ensure transparent and smooth information flow.
The small project team is also in line with the fast-changing era of mobile internet, and the success of WeChat proves this. Zhang Xiaolong recalled that the entire R&D process said that at the beginning, not a large team was operating, but a small team of more than a dozen people were operating. This reflects the methodology of Tencent's team management. In an era of interconnectedness, human creativity has never been released, and the organizational behavior of the team has changed. A lot of work is no longer done by a large organization, but by a small team of small and talented people. Zhang Xiaolong said, "In the WeChat team, we try to divide the team as much as possible, so the efficiency is higher."
Bloody entrepreneurial spirit, this is very important for the success of WeChat. Zhang Xiaolong later said that in the process of research and development, the WeChat R&D team often did not follow the common sense, and there were some radical practices. Fortunately, none of these practices encountered incompatible problems, they all went on and achieved success. .
The small project team, the internal innovation model solves the problem of lack of innovation and passion for large enterprises. In addition, in order to increase the competitive pressure, Tencent had three teams at the time to develop similar products, and finally WeChat stood out.

Targeting user needs
In the era of mobile internet, what are the characteristics of a well-known product? Zhang Xiaolong said that it is a product culture. "We have an ideal when developing WeChat, so that every user can use his value. For example, in WeChat, a user-published article is welcome, and a single article has a reward of tens of thousands or more per day. This was unimaginable in the past. These articles are products, and products that are valuable will naturally sell."
WeChat also has a distinctive feature, and hopes that users will leave WeChat as soon as possible. WeChat team hopes that each user stays as short as possible. What are the reasons? It is also the embodiment of product culture. Zhang Xiaolong once said on the WeChat public class pro version, "We think that a really good product is to make users feel comfortable, rather than leaving him there." The user experience is very cool, mainly because they think WeChat is a Efficient tools don't waste your precious time.
Unlike many Internet applications, WeChat does not recommend popular public accounts because users feel that such recommendations are a form of harassment. Users want to pay attention to some public numbers and need to take the initiative to find them. There is no public number list in WeChat, and there is no public page yellow page. This arrangement forces all companies to promote the public number themselves. The result is that users pay attention to the public number, most of which are from offline.
In addition to the above practices, WeChat's success has two points: one is to build a platform, and the other is to connect everything. WeChat is a very good social platform with network advantages. With the platform, the connection becomes a matter of course. For example, WeChat payment is the most important connection, and with a payment connection, more commercial connections are possible.

Natural commercialization
In the eyes of outsiders, WeChat has been very successful, but lack of commercialization, Zhang Xiaolong does not see it this way. He said, "WeChat has been commercialized, but we have been working hard to make a point, so that every step of commercialization is more reasonable." Reasonably means that WeChat not only reflects the commercial value, but also does not damage the value of users, not products. When you see commercialization everywhere, it means doing business well; the real commercialization is that the elephant is invisible, so that users can not see the traces of commercialization, but they are doing something to make money.
Zhang Xiaolong's team believes that the pursuit of the short-term benefits is not a good commercialization, good commercialization is a quiet, quiet, so that users feel comfortable and convenient. In the beginning, the commercialization of WeChat mainly consisted of games and advertisements. The game was first launched, and Zhang Xiaolong first thought of the "fighting plane" game, and the result was all the rage.
The WeChat public account is a part of WeChat commercialization, but WeChat always puts the user experience first. The public number can solve a big problem for enterprises, that is, to understand user needs in a timely manner. The user purchases any item in the public number, including payment by WeChat. All his consumption records and consumption behaviors are stored in the backstage of the merchant's public account. These user data are very valuable for merchant analysis and insight. WeChat's public platform will never be an industry, but a connection between industry and users. This is an open connection public platform.
WeChat payment is a relatively young carrier in WeChat's entire ecosystem, from the launch to the present, for more than two years. WeChat payment was officially launched on August 5, 2013 at the end of 2012. It is well known that during the Spring Festival of 2014, WeChat paid for the first time, and after WeChat and Didi taxis, the cooperation launched a social sharing of taxi discounts. In August, two important products, Money Transfer and WeChat Change, began to appear, and WeChat's smart life strategy was launched. In the Spring Festival of 2015, WeChat cooperated with the Spring Festival Evening. The "WeChat shakes and grabs the red envelope" activity adds a different flavor to New Year's Eve. A total of 500 million cash red packets are distributed to the people of the country. According to the official data provided by WeChat, the total number of WeChat red envelopes received and received reached 1.01 billion on New Year's Eve. During the time from 20:00 to 0.48, the total amount of WeChat shakes reached 11 billion. In October 2015, WeChat exceeded more than 200,000 merchant stores nationwide and was able to support WeChat payment. This is a milestone in the history of WeChat payment in the past two years.
After the WeChat red envelope was launched for 8 months, the WeChat team operated the WeChat transfer according to this idea. The WeChat transfer is also in the financial category, just like the red envelope. The red envelope creates a new payment scenario. Because traditionally, the Chinese will not be red envelopes all year round. As for the transfer, although it is also transferred to friends in WeChat, it is a demand, a transfer of payment needs. Then, to this day, Tencent has no way to bear the bank costs brought by the fast payment, so it starts to charge a certain fee for the withdrawal.

Let enterprise users realize O2O
The commercialization of WeChat is a natural solution to the needs of users, and eventually evolved into a business model that helps traditional enterprise users realize O2O. WeChat transfer function needs to add friends to operate. For the convenience of everyone, WeChat team launched the “payment and payment” function. The user can click on the plus sign in the upper right corner to see this function, open and authorize the QR code, and transfer the money to the other party without adding a friend. After the launch of this feature, more and more small businesses began to use it to replace offline collection and POS business. Some merchants have spontaneously launched WeChat payment discounts to attract customers. With WeChat "payments", every WeChat user has become a cash register, and the payment is very light, and the use of cash is becoming more and more subtle.
WeChat's payment products have developed 300 million card-binding users in just over two years, and the growth momentum is still very fast. Now, more than 50% of WeChat active users already have WeChat payment capabilities. This ability makes the payment process very simple and facilitates a transaction. Tencent is making WeChat payment a green channel for payment in all walks of life.
Subsequently, the WeChat team was keenly aware that payment was not a final requirement for the business. The payment solution is the inconvenience of the company's cash card, and has not really touched the core pain points of the enterprise. Therefore, the WeChat team launched a WeChat payment solution for enterprise users, hoping to use WeChat payment + public number to help merchants create a closed loop of O2O mode. Through WeChat payment and public number transformation, the WeChat team hopes to solve the problem of traditional enterprises understanding customer needs. For example, online customer identification, as long as they log in to register, the merchant knows who he is, and then can pull them back by sending information and other means. Because of these capabilities, companies in the Internet industry are actively rushing to attract new customers. These companies know that WeChat helps it make multiple purchases for every new customer.
If there is a way for the traditional industry to have the ability of Internet companies, the so-called O2O, Internet + can be implemented. For example, Jay Chou concert poster promotion is a typical advertising model, but add a QR code on the poster. As long as you scan the WeChat, you can open the relevant webpage and complete the ticket purchase in one stop. This time, the consumer will have a connection. Next time there will be Jay Chou's concert, everyone will stop watching the poster and directly pay attention to the news of the WeChat public number. Organizations can also generate big data for analysis through posters, and understand the user's geographic location, scan code conversion rate and other information, enough to carry out more accurate marketing. These examples are simpler to implement O2O models in traditional enterprises.
The commercialization of WeChat is a process to solve user problems. As the functions on WeChat become more and more abundant and practical, the ability to solve problems becomes stronger and stronger, and the value of commercialization will become increasingly prominent.
Since any product has a life cycle, what is the biggest crisis of WeChat? Who will replace WeChat? Zhang Xiaolong has always believed that this team includes himself and is a small team doing internal entrepreneurship. He is very reluctant to make the team very bureaucratic and large. As the business develops, the team will develop. How to deal with the problems of the big team is a crisis in Zhang Xiaolong's view.
"Who will replace WeChat, this question is too difficult to answer." Zhang Xiaolong said. Take the birth of WeChat as an example. If in the PC era, Tencent does not make any sense to make a WeChat-like product. But when smartphones became popular, everyone discovered new opportunities. It was the era of mobile internet that gave birth to WeChat, and there was no WeChat without mobile internet. From this point of view, the times are constantly being updated, and new products will emerge, which is unstoppable. When the era of mobile internet is replaced by the next era, there will naturally be a new king. At that time, Tencent needs to do internal subversion again.

Li Quanwei|Wen Lijian|Editor Li Quanwei is the assistant editor of the Chinese version of Harvard Business Review.
This article has abridged, the original text refers to the "Harvard Business Review" Chinese version of June 2016 "Zhang Xiaolong made WeChat: Tencent's endogenous subversive innovation."

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