"In the process of career development, we should stay away from power and do not excessively pursue excellence and personal interest. What we should care about are humility and recognition." This is the main content shared with you in the last issue. It is also the main principle for heart to heart communication. Today, I would like to share with you the key points of "Path-judgment" –  Bold destruction”and“maintain cash flow".

 

Path-judgment and spiritual-judgment are correspondings to the external and the internal, just as the family will be prosperous if husband and wife  share the same values. However, spiritual-judgment is not easy to control, while path-judgment seems to be more vulnerable to external environment. People should attach the first importance to spiritual-judgment, that is, not to be  perfect, but to be a proper person as far as possible. On this basis, it is easier to achieve path-judgment.

Path-judgment is an innovative management capability, and making a bold destruction and maintaining cash flow are the main principles of Path-judgment.

 

Bold destruction

There are two aspects of bold destruction, namely "emerging destruction" and "mature destruction"

Emerging destruction: breaking force and torque when crossing the river by feeling the stone

Emerging destruction refers to the attempt to gain competitive advantage by setting new rules of the game while emerging markets are lacking of market rules. The emerging markets here do not necessarily refer to the markets of emerging countries; but refer to those markets where there is no clear rule of the game for competition.

 

In this kind of market, the attitude of emerging saboteurs is like cross the river by feeling the stone. As the emerging market is still lacking of rules so emerging saboteurs usually use a way of learning-by-doing, and then modify if necessary. The emerging saboteurs needs the courage of breaking force and torque. A typical case is the development of China's e-commerce, such as the experience of Alibaba.

 

Emerging destruction: Alibaba 's Tmall Online Shopping Carnival on Nov.11

With the advent of e-commerce era, e-commerce has been growing. Just a few days ago, Alibaba announced its purchase of Gaoxin retail equity for HK $22.4 billion with a share of 36.16%. This is another major measure after the strategic partnership between Alibaba and traditional retail industries such as Intime, Suning, Sanjiang and BL. The integration of online and offline will further accelerate the process of new retail. This is a case of emerging destruction. Further observation are needed to determine whether it will be successful or not because the entire Chinese consumer market is so that it is not easy to develop into a set of competition rules. Fortunately, Alibaba has become a shining model of Chinese enterprises. First of all, thanks to the rapid economic growth after China's reform and opening up. What’s more, the innovative cells of its own corporate culture are also very active. So Alibaba is very suitable to be a new saboteur. Tmall Online Shopping Carnival on Nov 11 is the best interpretation and performance of the company to show their emerging destructive capacity.

 

About ten years ago, Jack Ma appointed Zhang Yong, who is now the CEO of Alibaba, as the CFO of Taobao. He was responsible for the business development. From the perspective of personnel appointment, this is a bold attempt, and Jack Ma also supports the idea of Taobao Mall. Tmall Online Shopping Carnival on Nov 11 has an amazing growth from 50 million yuan in 2009 to 168.2 billion yuan this year. Its growth took place in the consumer market without too many rules, and Tmall built its reputation as the goal and build up their sky. After the successful marketing activities on Nov 11, the company continues to make bold innovations in its acquisition of physical supermarkets and hypermarkets, and tries to formulate rules for competitors in China's consumer market.

 

Mature destruction: courage and perseverance under the guidance of intelligence

When the attitude and method of bold destruction are used in mature market, it is called "mature destruction". The mature destruction here does not necessarily refer to the markets of developed countries such as Europe and the United States, but generally refers to the markets with numerous competitors and existing rules of the game. In emerging countries, there are also many mature saboteurs.

 

In addition to the different strategies of mature destruction and emerging destruction, the more important thing is that mature saboteurs are used to be planning carefully, that is, they are more intelligent oriented and willing to use market analysis to carry out market disruption activities. Generally speaking, in a mature and destructive environment, many competitive enterprises will follow the example of Western strategists such as Clayton M. Christensen, whose "theory of disruptive innovation and sustainable innovation" and other mind-set to guide the thoughts of mature saboteurs. Those mainstream enterprises in the mature market favor this kind of thinking, and this is also one of the favorites method in MBA teaching. However, it is unnecessary to compare between “cross the river by feeling the stone” and "intelligent guidance with careful planning". Both of them are developed under different dynamic environment and market rules.

 

Mature destruction: rapid growth of Adidas

For example, in recent years, Adidas sports shoes have developed rapidly and have catched up with Nike. They even entered the European and American fashion women's shoes market with sports shoes. In short, in this kind of market with fixed competition pattern, it is required to rely on the precise analysis of strategic competition and efficient and effective executive power, including reducing costs, continuously promoting the development of American market, and streamlining its brands. Adidas’ shares have risen about two-thirds since Adidas announced that Mr. Rorsted was CEO in October. Although Mr. Rorsted was good at marketing in the past, he was very clear about the rules in the American sports shoe market. Today, we will not discuss the enterprise strategy in depth. However, taking this as example, it is pointed out that the difficulty of mature destruction is more than that of emerging destruction. Either way, the one who keeps cash flow is the winner.

 

Keep cash flow – The one who lives longer is the winner

When it comes to maintaining cash flow, we have to mention the long-term investment criteria from famous investor Warren Buffett, whose portfolio includes many mature enterprises, his investment portfolio mainly included companies  that have at least 10 years management. In addition, under his investment style, he usually mercilessly removes companies that don't attach great importance to cash flow management from his portfolio. So, we can see that he  value about the survival of the enterprise, and he believes that the one who lives longer is the winner!

 

In any case, from former chief financial officer to the successor of the CEO, it is conceivable that he attaches importance to the cash flow control. So far, Alibaba is regarded as the leader of emerging saboteurs, and the least thing to underestimate is its cash management ability.

 

In the past two weeks, the media around the world have reported that many Chinese bicycle sharing enterprises are facing closure due to the rupture of the capital chain. This is a good case of cash flow management, but also a case of mature destruction. The marketing concept of bicycle sharing is very simple. In fact, the competition rules of the market are also very clear. At the beginning, it was covered in the fog of big data, so all investors agreed that business of bicycle sharing was lacking of market rules, and competitors first took " The strong will be strong forever " as the goal and ignored cash flow management. In the future, the story of big data will continue, so that investors will continue to invest in companies that have run out of cash but seem to have good market share. If the overall financial environment is not favorable, I am afraid that local governments had to operate the bicycle sharing business!

 

Tokugawa's famous saying: "the one who lives longer is the final winner.". This is reflected in the survival orientation of enterprises, that is, whoever maintains cash flow can live longer, which may be the final winner.

 

Money is the key to success

The ultimate goal is to have access to wealth.

 

People have three treasures of happiness: firstly, good mental and physical  health; secondly, never lack of money, lastly,  barely no worries and live in the moment. As mentioned, one of these treasures is about "money".