Source: Yonyou Digital Marketing (ID: yonyouec2)
Introduction: "Digital transformation is not just a strategic choice for Chinese enterprises, but also a matter of survival."
In the post-pandemic era, digitalization has become a consensus among all enterprises.
According to a report from a research and consulting firm, a survey of thousands of enterprises on their digitalization progress found that 43% of executives believe the pandemic accelerated their digitalization by 1-4 years, and 50% believe it accelerated by 5-15 years. The pandemic's accelerating effect on enterprise digitalization is evident.
However, many enterprises, in the process of internal digitalization, mistakenly believe that implementing a system equates to achieving digitalization, or blindly think that building a complete information system can solve most problems in enterprise development. But reality often turns out quite differently.
Starting from the end, let's examine why enterprises need digitalization, what misconceptions exist in digital development, how to effectively promote digitalization, and what inherent limitations exist.
Why do enterprises need digitalization?
In an era of underdeveloped information and low labor costs, most enterprises adopted traditional "people-intensive" tactics in internal management and market operations.
Take FMCG as an example: companies like Wahaha, Master Kong, Uni-President, and Jinmailang achieved high market share largely due to their early channel and communication strategies.
In the early days of reform and opening-up, China began integrating into the market economy, leading to a surge of small and medium-sized entrepreneurs. Commerce and distribution flourished, and well-known consumer goods companies like Master Kong, Uni-President, and Shuanghui emerged during this period.
At that time, consumers' suppressed demand was suddenly released, and the entire consumption and distribution environment entered the producer sovereignty era: whatever enterprises produced, consumers consumed.
Countless FMCG companies believed that "as long as products are on the shelf, they will sell," so manufacturers and distributors aggressively added staff and vehicles to push products into stores and gain higher market share.
In brand communication, due to objective constraints, the only ways for consumers to receive information were centralized media such as TV, radio, and newspapers. In terms of channels, retail giants like Walmart and Carrefour entered the domestic market and gradually became the main channels for product distribution and consumer shopping.
Big brands, big media, and big channels corresponded to rapid brand development, i.e., the HBG (How Brands Grow) theory: brand growth = penetration × salience × availability. Under this theory, companies like Naobaijin and Jianlibao frequently spent fortunes on a few seconds of prime-time advertising on CCTV.
On November 11, 2009, the first Singles' Day shopping festival was launched, with single-day sales reaching 52 million yuan. The next year, that figure hit 936 million yuan; in 2011, it exceeded 5.2 billion yuan; and in 2012, total sales during the Singles' Day promotion reached 19.1 billion yuan.
Meanwhile, the improvement of infrastructure such as financial payments, logistics, transactions, and promotional tools made traditional manufacturers realize the power of online "barbarians."
In the following years, e-commerce began to impact traditional offline distribution models devastatingly. The HBG theory began to fail, and after repeated resistance and defeats, offline physical businesses had to surrender and go online.
If e-commerce opened the door to enterprise digitalization, then changes in the objective environment pushed enterprises to the threshold of digitalization.
Apart from the pandemic's impact, I believe the main factors driving enterprise digital transformation include:
1. Shift from production sovereignty to consumer sovereignty:
Increased production efficiency has led to more refined social division of labor, with production, supply, and sales gradually separating. Production is shifting from a unique enterprise function to an independent social function, making socialized production a new social infrastructure.
The relationship between producers and consumers has shifted from "producers produce what consumers consume" to "producers produce what consumers need."
2. Shift from centralized communication to fragmented communication:
The internet, especially mobile internet, has brought about the rise of platform media and social media. Users now receive information through platforms like Weibo, WeChat, Douyin, and Kuaishou instead of traditional TV, newspapers, and magazines. The core of communication has shifted from centralized media to individual entities.
3. Shift from large-channel distribution to fragmented channel distribution:
Previously, hypermarket KA channels like Walmart, Carrefour, and RT-Mart were the main distribution channels for FMCG. Now, offline convenience stores, traditional grocery stores, online social e-commerce, video e-commerce, and content e-commerce are developing rapidly, and channels are diversifying.
4. Shift from simple management to complex management:
As business scale expands, team size will also reach a new level. With increasing differences in region, gender, age, and other core factors among team members, management costs and difficulty will grow geometrically. Introducing digital tools and processes for management becomes inevitable.
In summary, enterprise digital transformation has become inevitable.
What is enterprise digitalization?
Since enterprises must undergo digital transformation, what exactly is digitalization?
Digital transformation refers to using new technologies such as artificial intelligence, big data, cloud computing, and 5G to establish a new, digital-technology-centric, dynamic, and innovative business model. It helps customers achieve cost reduction, efficiency improvement, risk control, and reputation enhancement, thereby fundamentally improving enterprise competitiveness.
It is worth noting that enterprise digitalization is not simply informatization. Wang Xiangfeng, CIO of Sika Dega, once stated, "Traditional IT system upgrades do not bring significant changes to the overall business structure. The original processes remain the same; through system upgrades, we better improve management efficiency, optimize operations, and reduce costs. That is the value and characteristic of informatization.
Digitalization, on the other hand, is fundamentally data-driven. But the process is not just about building information systems; it also includes exploring innovative businesses. Digital transformation must be accompanied by business transformation. Without this, digitalization remains at the informatization level."
Thus, the essence of digital transformation is a comprehensive change in enterprise organization, business, market, marketing, human resources, product development, supply chain, manufacturing, finance, and other operational elements and processes. Digitalization without business transformation is merely informatization.
For most enterprises, the challenges of digital transformation come from various dimensions: from technology implementation to business innovation, from organizational change to cultural reshaping, from digital capability building to talent development.
Therefore, when implementing digital business, enterprises must clearly recognize that digitalization is a long-term process, not a short-term tactic, but a long-term strategy. It cannot be achieved overnight, nor can immediate results be expected. Many enterprises need 3-5 years or even longer to see significant effects of digital transformation.
At the same time, we must also recognize the new business possibilities that digital transformation brings, namely data assets.
Digital transformation is not just about applying new technologies to production processes; it should also involve continuously accumulating and forming digital assets during the transformation. Building competitiveness in the digital world around these assets is the true way to establish core competitiveness for enterprise development.
Problems faced during enterprise digital development
In my experience with numerous consumer goods companies, the larger the enterprise, the more difficult the digital transformation, including some leading food and beverage companies. In contrast, small and medium-sized companies often undergo more thorough digital transformation.
Why does this happen?
1. Interest issues. Large enterprises have huge teams and market stock. During digital transformation, it is inevitable to touch the interests of some people, making it difficult to implement in many business processes and departments. Digitalization becomes the digitalization of only certain people or departments.
This requires that enterprise digitalization must have the mindset and determination of "change thinking or change people," which determines that digitalization must be a top-down project.
2. Mindset issues. Some enterprises implement digitalization well but find it difficult to use digital tools to guide their business practices. They only use digital tools as tools for market operations, not understanding how to use the data obtained to feed back into business actions. The tools and business seem well integrated but are actually disconnected, achieving only informatization, not digitalization.
3. Organizational and talent issues. To effectively promote digitalization, some enterprises must also restructure their organizational architecture.
Because enterprises have formed fixed thinking paths and behavioral patterns over time, while digital transformation is dynamic, how to establish and adjust organizational structures and talent pipelines that match the transformation is a major challenge.
4. Digitalization detached from business issues. In the process of enterprise digitalization, we should clearly recognize the unity and differences between actual business and digital tools.
Unity refers to the fact that enterprise digitalization and business ultimately synergize, promote each other, and develop together. Differences refer to the need to see practical issues in business development when digitalization guides business, such as distributor channel conflict, wholesalers dumping goods or adulterating products in the daily chemical and personal care categories. We must see both the long-term nature of digitalization and the reality of actual business scenarios.
5. Blindly exaggerating digitalization issues. Returning to the essence of enterprise development, quality products, reasonable prices, matching channels, and effective marketing remain the foundation for enterprise growth.
Digitalization can only help enterprises add brilliance to their existing splendor, helping them reduce costs, increase efficiency, optimize management costs, and improve operational efficiency. However, it cannot fundamentally solve all enterprise development problems. Do not regard digitalization as a panacea that can solve all problems in enterprise development.
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