Read it in one article—Xiaomi’s ecological chain enterprises’ experience in making popular products (nearly 10,000 words summary)
Author:rain
Time:2019/12/06
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Source · Xiaomi Youpin ▼ Recently, everyone is talking about the cold winter of capital, the Sino-US trade war, and the slowdown of corporate growth, but the Xiaomi ecological chain has risen against the trend. Dozens of […]
source · Xiaomi Youpin
▼
Recently, everyone is talking about the cold winter of capital, the Sino-US trade war, and the slowdown of corporate growth, but the Xiaomi ecological chain has risen against the trend. Among the dozens of manufacturing unicorns in the world, Xiaomi ecological chain companies account for four, of which two are listed in the United States. Why is Xiaomi's ecological chain successful? There are many articles on the market that analyze internal factors, but they are all fragmented. This time, from the perspective of an internal front-line trader, we made a summary of nearly 10,000 words in 2019, and analyzed why the Xiaomi ecological chain was successful. This article synthesizes the 2019 Xiaomi ecological chain enterprise CEO's "practical experience and in-depth dry goods in making explosive products", and we will share them all with you without reservation!
01
About choosing a track
"Practice internal skills and enhance understanding and insight into the nature of the industry.Quickly anchor market entry points through the use of methods and tools." "When you are questioned by the whole world, you can still dare to give it a try."
——Jiang Zhaoning, founder of Yeelight
On the road to entrepreneurship, who should you trust?How many people's doubts are enough to shake the future you firmly believe in?
In 2012, when Yeelink chose the "topic" of smart lighting for transformation, most of the feedback it received was negative.
Although it is denied by many people, according to the intuition of a communication engineer, I think smart lighting must be the future-I am a firm believer in the Internet of Everything.
From the beginning of the company's Yeelink (Internet of Things cloud platform), we have seen that so many people are interested in the Internet of Things and smart hardware, so looking forward 10 years, smart lighting is about to become popular, so we should do it now.
In those few years, the company has been closing down, on the verge of bankruptcy, short of money, super short of money.We hardly receive wages. From Qingdao to other cities to meet investors, we either take an early flight or train, leave early in the morning, and return home in the early morning.
Before I got Xiaomi's investment, I even talked about selling the company more than once.However, the thought of giving up was only fleeting.
This is a very common situation for early entrepreneurial teams, and I believe many people have faced it.Fortunately, the partner has always been with me. We thought, let’s persevere. If the house is sold and the account can be paid back, we will not fail.
From the beginning to the end, what our team has not changed is that we want to make good things.For this wish, we paid no less price and did not consider too many consequences.
——Excerpt from "Jiang Zhaoning:Entrepreneurship requires a little reckless impulse"
"There may be big business hidden in traditional industries."
——Fengguang Zheng, founder of Qimian
Regardless of entrepreneurship or employment, popular fields are always crowded.Have you ever thought that in an industry where talents are outflowing, there may be great opportunities instead?
I came from a manufacturing background. I have been working on mobile phones for 16 years since graduating from university in 2000 to Seiko Epson.In those years, I clearly felt that the outstanding college students who graduated every year in mainland China went to IT, Internet, finance and other industries.
And some dirty, tiring traditional industries, many young people leave it (laughs).Take the leather industry as an example. In Taiwan, leather shoe OEMs of various international luxury brands are also facing inheritance problems.
The "second generation" who finished their studies in the United States only want to do finance, technology, and the Internet when they return to China, and they are not willing to make shoes.
So I judge that this industry is a depression of talent value.
A Hong Kong friend who graduated from Cambridge, England, coincides with me surprisingly.His family is engaged in leather trading. After returning from studying abroad, he entered this industry firmly, thinking that the Chinese leather market has great opportunities.After talking to him, I was more determined to start a business in the leather goods industry.
But the direction of entrepreneurship is not a matter of patting the head.
To find an opportunity market, you have to do your research.You can't just pat your head and say you found it.
My method is to first use my intuition to target several large-scale industries, and then look at the reports of the top listed companies in this industry one by one.
How much market size did it do and how much money did it make.It is best to look at listed companies in Hong Kong.
At that time, I looked through several listed footwear companies, and one of them stunned me.With a market capitalization of RMB 100 billion, the peak and valley gross profit margin exceeded 50%, and the lowest net profit was more than ten percent, earning four or five billion a year.
In addition, the average American buys 8 pairs of shoes per person per year, while the Chinese only buys 1.8 pairs. So is China's future market big?
Don't stop when you investigate the market offline.I have been going to Guangzhou Metropolitan Shoe City and SKP, and I have taken turns to look at different places in Shenzhen.
So, have you really found a big market?To start a business, you must have data support, and you cannot take it for granted.
——Excerpt from "Dialogue with Zheng Fengguang:Doing customer value is to make customers happy from the bottom of the heart"
02
About user needs
"In the process of transforming from 'user needs' to 'product definition', there is a 'black box', and most people rely on their brains.""Pseudo rigid demand will lead to wrong product definition, and all subsequent efforts are dying."
——Chen Keyong, the person in charge of Mijia Signature Pen
There is a saying in statistics:"When we do market research, if your research object is someone you know, it's called sample contamination."
When we are doing research, we often take some suggestions from friends around us as real needs. In fact, he is trying to give you face and not make you feel uncomfortable, and in the end he leads you into a pit.
What you assume, is not real.
Pseudo rigid demand will lead to wrong product definition, and the project is doomed to collapse before it starts, and all subsequent efforts are dying.
Today's companies are completely different from what they did more than ten years ago. Before we make a product, we must use data, interviews with strangers, and suggestions from professionals in the industry to thoroughly and rationally investigate the needs.
Don't think that you are the smartest person in the world, you have discovered a gold mine, don't think so.
Brother De (Liu De, co-founder of Xiaomi Group) taught us a few years ago:"If you redesign and redefine the largest, best, and most frequently used products, you are basically 80% sure of success."
This is because this market has already been verified, and you don't need to cultivate a new market.
——Excerpt from "Dialogue with Chen Keyong:Too many people know how to do subtraction, but too few dare to do it"
03
About Products
"Product is 1, rest is 0.Product is the biggest marketing.Business returns to its essence, and it is necessary to create value for users with good products.""The underlying logic of explosive thinking:'Divergent Multivariate' becomes 'Convergent Focused'."
There has been a big change in product innovation in this era—for example, Apple has a very important influence on the "innovation method"—that is, it has changed the divergent diversification in the past into convergent focus, and the final result is to greatly improve the quality of the product. efficiency.
Apple has achieved annual sales of 100 to 200 million units through several products.In the past, we did not dare to imagine that a single product could generate market explosive power in this way.
We found that this convergent focus mode actually greatly improves the efficiency of innovation.
Apple has evolved its products to this day. Whether it is the all-weather long battery life or the simplification of the interface, its purpose is to push it to the ultimate goal of "no interface".Because of the cable tie, this tool is not free.
So it considers this issue from the beginning to the end, from the essence of things.Therefore, the designer does not have any entanglement, and iterates continuously.
Focused product innovation not only obtains explosive products, but also a reasonable way to optimize the talent structure and cultivate talents.
For example, when we think about things clearly at the beginning, we use a very restrained method to make products, just like piercing a field with the tip of a needle. At this time, there is a high probability that we will get a positive feedback—the product sells well. It works well, the scale is large, the whole system runs smoothly, and employees have a higher sense of accomplishment.
Next we will be more focused, and then you will produce better products.
There is a very critical statistic, Apple's industrial design team has only 21 people, but they are the best engineers in the world.They are a method of focusing on positive feedback, constantly polishing such a highly efficient team.
In my opinion, the core of real innovation is to grasp the essence of things, to think from the beginning to the end:What exactly do we want?What is the final outcome we want?
Therefore, we must insist on pursuing the essence of the product with simple, clear and focused thinking, so that explosive products may appear.
——Excerpt from "Smartmi CEO Su Jun:How to Use "Explosive Thinking" for Product Innovation》
"Put more thought into the product, 'slow' is 'fast''."
——Jiang Zhaoning, founder of Yeelight
"What's the secret to Mijia LED smart desk lamp selling well?"
There are no secrets, just make the product well.
Let's observe carefully:At the connection between the lamp pole and the lamp arm, there is a very delicate and small rotating shaft. You must know that the shafts of many desk lamps are clumsy and thick, and it is difficult to stabilize and wobble.For the design of this shaft, we specially selected the shaft used for notebook computers, and there are more than a dozen components in it that are linked together.
Do you find your laptop's hinges clumsy?Of course not, this effect is what we want for the lamps we make.
After the product is made, you can see that the shaft is very delicate, and like a notebook, it can hold the lamp arm at any angle without shaking.
In the lighting industry, good lamps only require that the life of the shaft be 2,000 or 3,000 times, while we require the life of the shaft to be over 10,000 times, which is several times the industry standard.
Also, we will find that its pole is a cylinder, but we designed a slightly flattened runway-shaped stretching body in the lamp arm part.
Many people will ask, why the lamp arm part does not continue the cylindrical shape?
Because if it is round, the lens part will have a curved surface, and the light will directly hit the user's eyes, causing glare.The lamp arm we designed is not only flat, but also slightly pushed inward at the lens part, so that the light will not directly hit the eyes at all, which can protect the eyes of users.
In the market, you can see that the lamp surfaces of many table lamps are arc-shaped, and even some so-called eye protection lamps are designed in this way. In fact, it cannot really protect the eyes.
So we reluctantly gave up the more beautiful curved surface design and made it flat.
Our thoughts are all spent on the product, there is no other routine.
——Excerpt from "A Serious Worker Never Anxious"
"The product must return to the essence, and it is amazing to be upright."
——Miaomiaoce CEO Liang Yuyang
The armpit and oral thermometer we made has been released for less than a year, and now it is running with millions of sales.
Later, we analyzed why this product sold well, because it was particularly in line with the concept of "being honest and surprising".
The stick thermometer and the temperature-hygrometer are both our flagship products, but these two are exactly what are already on the market, but the things on the market are not good enough, so we make it a little better.
The market has been well educated, and it is easy for us to break through with high-quality products.
This is returning to the essence, keeping the integrity is amazing.
As for other large companies and small companies copying our products, I am not worried about this. I think the most feared thing in the Xiaomi ecological chain system is plagiarism.
Because the essence of plagiarism is to make a profit, just like two people fighting, I took a brick first and bled myself, and others were afraid, who would dare to do it with you.
——Excerpt from "Miao Miao Measuring Liang Yuyang:Strategy is typed out, not thought out"
"It's not about doing it all over again,It's called 'product innovation'."
Product innovation does not mean re-doing a product from start to finish.
"Product innovation" is by no means the same as "technical innovation", but integrates multiple innovation methods, fully integrates these methods into a product, and finally achieves a qualitative change in product experience.
The core of innovation is combination, that is, the recombination and reconfiguration of resources.
Many people have a misunderstanding about originality and core technology, that is, innovation is only mine if everything is mine from beginning to end.
It is by no means that my company has 100,000 people, and I do everything by myself. This is not called core technology.Some low-end technologies and businesses are even historical burdens, and companies still want to get rid of them.
It is to do things in your "circle of competence" and do what you are best at.
The "circle of competence" is one of the most important principles adhered to by value investors represented by Buffett. Buffett explained it in the "Letter to Shareholders" as follows:
"You don't need to be an expert at every company, not even many.You just need to be able to evaluate companies in your circle of competence... the size of the circle of competence is not the key, but knowing its boundaries is."
Not understanding won't let you lose.
——Excerpt from "Dialogue with Zhimi Su Jun:Loneliness is the fate of entrepreneurs"
"Start-ups survive only by word of mouth."
——Fengguang Zheng, founder of Qimian
This year’s Xiaomi ecological chain family banquet, General Manager Xiaoping (Chen Xiaoping, CEO of Yunmi) said, “Products are the top project of the CEO." Then Chairman Yan (chairman of the Xiaomi Quality Committee) also said, "Quality is also the top project."
So I temporarily changed the speech, and I said:Product + quality is the gene that has survived from seven sides—the product has six sides, front, back, left, right, top, bottom, and the seventh side is connotation and quality.
Leather shoes convey the sense of ritual that has always existed in Chinese culture.In recent years, I have started businesses in places like Huaqiangbei, and my dress has gradually become less refined, but I still don’t compromise on my shoes.
Before Qimian, I started three businesses, all of which were mobile phones.To make seven noodles, I made a lot of determination:Find something that will last at least 30 years.
From the second half of 2017 to 2019, Qimian was established for more than a year and achieved a turnover of nearly 50 million yuan. Many companies in Guangdong feel incredible.
But to be honest, I think with the correct values and methodology, this result is normal, and it is not good, and there are still many problems.
——Excerpt from "Dialogue with Zheng Fengguang:Doing customer value is to make customers happy from the bottom of the heart"
04
About supply chain
"The supply chain is far more important than you think.The halo of product success cannot conceal the contribution of operational excellence and supply chain management.""Look for the foundry from the logistics box,Small details that are overlooked are precisely the big opportunities."
For hardware, the supply chain is very important, but good foundries are all underwater, so how to find them?
The truth is hidden in the details.
For example, when we were looking for an OEM, we couldn’t find it in the public information at all. Finally, we found the company’s name on a logistics box.
If it weren't for industry experts and attention to detail, who would have thought of finding information on logistics boxes?
We found this company when we were riveted. What we value is its core competence in this field.
others are notIt can be done, but we find someone else to do it, which may delay the project.But this factory has a high probability of being successful once, which can guarantee that we will be listed in the year.
The development pattern of listing in the year and listing in the second year is completely different.
In this era, speed is really the most important dimension.
——Excerpt from "Dialogue with Zhimi Su Jun:Loneliness is the fate of entrepreneurs"
"Founders who don't understand finance and supply chain are a disaster."
——Miaomiaoce CEO Liang Yuyang
Many technical teams will encounter a common problem, that is, the founders don't know much about finance and supply chain.
Founders who don't understand finance are scary.
For example, I had a good life before the B round. You don’t have many products and you have money, so you don’t need to care about many things. Once you start to release a large number of products, everyone knows that cash flow is very important at this time.
But when you don't understand finance, and you happen to understand the supply chain, it may be a disaster for the hardware team.
Success is actually very difficult to replicate. Every company’s success has its own unique background, but it all dies due to those reasons, such as the collapse of the team, the loss of funds, and so on.
There is a term in the supply chain called "Bullwhip Effect". Its basic idea is:
"The untruth of demand information will go upstream along the supply chain, and it will produce a phenomenon of gradual amplification.When going to the supplier, there is a big deviation between the demand information and the actual customer's demand."
When your product is easy to sell, once there is a risk of out-of-stock, dealers will increase orders, fearing that they will not have the goods, which will create a false impression that our demand is very strong.When you have all the goods, they don't want so many, and the inventory is high again.
We've had this happen before.It's scary to have an inventory of several million.
How to find a way to control it?
First, Xiaomi Jibuy can help us get good prices and good payment terms;
Second, tight collection and slow payment (find a way to extend the supplier's account period, and whoever owes me the money will return early).
In fact, it is very simple, but how profound the execution is depends on the skill.
——Excerpt from "Miao Miao Measuring Liang Yuyang:Strategy is typed out, not thought out"
05
About the brand
"Differentiated survival is the only way for brands to survive.""The core value chain of product innovation,The reason is that 'product innovation' can 'shape brand'."
Consumer brand is synonymous with the image of a country. It is not only a consumer demand, but also a huge rigid demand for the rise of a country.
I particularly like the Sony brand, I've looked at its history and read all the books and literature about it.From 1955 to the present, the establishment of this brand value is through a product line that innovates one by one.
The core value chain of product innovation is that product innovation can shape the brand, generate value feedback, and promote enterprise growth. More importantly, continuous product innovation can promote the brand to enter the stratosphere and enhance the enterprise's ability to resist risks.
We know that the process of take-off and landing of the aircraft actually consumes a lot of energy. When it reaches a certain altitude, it only needs a small force to maintain a stable flight in the stratosphere.
The same is true for enterprises. When you build brand beliefs with users, your enterprise's ability to resist risks will be strengthened.
——Excerpt from "Smartmi CEO Su Jun:How to Use "Explosive Thinking" for Product Innovation》
06
About the channel
"Absolutely perfect channels do not exist, only those that suit you are perfect.The ever-changing new retail channels are inseparable from the reorganization of the relationship between people and goods.""Dare to be open, to find the best platform,Really treat you as a platform for customers."
——Chen Keyong, the person in charge of Mijia Signature Pen
Private domain traffic is becoming more and more important. Many start-up teams have good products, but they can't sell them because they can't reach their own user base.
For start-up companies, how to use the minimum cost and maximize the acquisition of these traffic?
Dare to be open, find the best platform, and really treat you as a customer's platform.
Now there is an oligopoly in the entire e-commerce. It is difficult for new teams and new brands to sell on some high-traffic platforms, and even if they do, they will have to pay a lot of cost.
I have seen a lot of platform stores bullying customers. He regards the merchandiser as an object of exploitation instead of his own strategic partner.
An excellent product team is a cow that contributes resources and competitiveness to the platform.The two sides should be in the same lineup, not opposing sides.
The e-commerce platform is essentially two things, whether the product is competitive enough, and whether the traffic cost is low enough.
Products and traffic complement each other. You can’t have products without traffic, and you can’t have traffic without products.
"Selling poorly is not a channel problem, but a product problem."
——Chen Keyong, the person in charge of Mijia Signature Pen
Many people complained to me that there is no place to sell the product and there is no order. Can you sell it for me? I came to have a look and the product is average.
Today, it is not that there are no channels. On the contrary, the channels are too rich, and the fact (probably) that the products cannot be sold is because the products are mediocre.
Or the product is really good, but your supply chain management and control capabilities are limited, and the cost of the technical solutions and solutions you adopt is too high, making the product price unable to meet market demand.
After the cost is out of control, you lose your product pricing power. Once you lose your pricing power, you have almost no chance.
There is a saying in Xiaomi's ecological chain called "killing a chicken with a bull's knife", which means finding a master to do the work.I added two ox knives, called three ox knives.
◆ The first sledgehammer is "people".
"Products are like people, and people are like products."You can only make good products if you find a master.
◆ The second sledgehammer is the "supply chain".
Why did our supply chain always make mistakes in the past, because we always wanted to find one with a lower price. As a result, he repaired and changed the mold in various ways, until the mold was broken, and the sales season passed, and the product did not come out.
Therefore, in the supply chain, I suggest that you must find the top three suppliers in the industry, because their rich experience in production management will save you a lot of pitfalls.
On the surface, the cost may be a little higher, but overall, the cost is smaller.
◆ The third knife is "channel".
A good product should not be sold in the east or in the west, but must be sold on the largest and most effective platform, so as to have a huge brand endorsement and a huge amount of exposure.
After you sell well on this good platform, you can sell it on other platforms, and everyone will rush to buy it.
If there was a platform like "Garn" in the past, which helped everyone to give some methodologies and scientific concepts for product entrepreneurship, and I had a complete thinking model or path for product development, I would be able to avoid a lot of pitfalls.
——Excerpt from "Dialogue with Chen Keyong:Too many people know how to do subtraction, but too few dare to do it"
07
About how to avoid pits
"The core of everyone is to survive and fight a protracted war.Entrepreneurs must first have a strong heart.“"Even in the face of uncertain circumstances,We must also move forward boldly and not be afraid of hands and feet."
——Chen Xiaoping, CEO of Yunmi
We all know that the economy has not been doing well lately.A few personal suggestions to share:
◆ The first point of suggestion is to return to the basic logic of the enterprise, return the business model to the basic logic of product innovation and operating efficiency, and return to the basic value.
No matter how ever-changing, no matter whether you use the cloak of the Internet or the cloak of a traditional enterprise, the basic logic of an enterprise will never change.
◆ The second suggestion is to improve your ability to predict and perceive complex environments, constantly adjust business direction and trend judgment, and try to penetrate future trends.
Why is starting a business a narrow escape?
This "nine" is mostly because of not seeing through the future.
◆ The third suggestion is that even in the face of an uncertain environment, we must move forward boldly, fearlessly, and actively explore breakthroughs in business directions and models.
“Entrepreneurship cannot be stopped.The exploration of the business direction has nothing to do with the environment, but it must be "a prophet of plumbing in the spring".
——Excerpt from "Dialogue with Yunmi Chen Xiaoping:Whether you dare to deny yourself determines your upper limit》
"Single product breakthrough, light mode, and food in hand."
——Chen Keyong, the person in charge of Mijia Signature Pen
First, break through single products and make explosive products.
If you are long, you may not sell a lot, and if you are long, you may not make a lot of money.
In the era of mobile Internet, it must be a single product hit, basically this has become the mainstream value, everyone wants to be a hit, and to do a hit, you must have a methodology for making a hit, and you must have a thinking of making a hit.
We don’t make so many products, don’t make a bunch of products at the same time, but make a single product well, because a single product takes up less resources.
Second, to improve efficiency, we must first lighten the model.
A start-up company must not do a heavy model right away. Doing a heavy model will turn your limited manpower and limited funds into "dead money" and "dead people". The light model will improve efficiency.
When the company has developed to a certain level, it will develop in the direction of heavy model, because the heavier the model, the higher the barriers, and it is not easy for competitors to attack you.
Third, if you have food in your hands, you will not panic in your heart.
Don't wait until you have no money to make today before looking for money. You must allow yourself five to ten months of cash reserves. During this time, you must quickly obtain new opportunities, otherwise you will starve to death.
Some projects that cannot bring profit or prevent capital circulation should be transferred as soon as possible, and the energy and resources should be concentrated on the project that you can achieve.
——Excerpt from "Dialogue with Chen Keyong:Too many people know how to do subtraction, but too few dare to do it"
rain 