Introduction: Continuous learning and exploration are the only way for executives to stay relevant, and the best choice for corporate development.
Author 丨 Hai You Review 丨 Gou Gou Layout 丨 Zhang Yuwei
After working in the workplace for a few years, people face two paths: the expert route, becoming an expert in a specific field, or the management route, leading a team to accomplish tasks assigned by the company. Generally, if you want to take the management route, you also need to reach a certain level on the expert route, otherwise it is difficult to lead a team. For corporate executives, first they must be experts themselves, then they must have the ability to empower their team, then lead and manage the team, and finally achieve corporate, team, and personal value while completing various performance indicators.
Many people ask: "How do those directors, managers, and executives get to their positions?" Some answer: "There is only one way for executives to grow: continuously achieve performance goals... because the requirement for executives is performance, performance, performance." In fact, if you only focus on performance, you might be a "fake executive." The emergence of "fake executives" leads to the company being just a gang, even constantly staging "palace intrigue scenes."
Senior talent must not only complete current business goals but also establish processes, mechanisms, and systems, and shape values. A true executive is not only a good goal achiever but also an organizational expert. In short, being a true executive is not easy.
In recent years, I have had in-depth communications with executives from different companies, compared them, and summarized some insights to share with you.
Global Vision Ability
A phrase I often say is: Look at business operations from the perspective of industry development, look at distributor operations from the perspective of business operations, and look at business market operations from the perspective of distributor operations. Without a global view, do not rashly issue orders to subordinate units; the disaster of taking a partial view as the whole has been playing out in the FMCG industry.
As an executive, you must first have a big-picture view and industry vision. What is a big-picture view? Others see only trees, but you see the forest; others see only today, but you can see tomorrow. You can systematically and prospectively view problems, and grasp the trends and laws of development from the overall perspective. That is a big-picture view. So to be a good executive, you need a higher vision, able to discern industry trends and external market changes, and see trends, markets, competitors, business, and yourself.
For example: After an executive takes over, the first core task is market research to understand the current operating status of the company. Market research first requires understanding the development of the industry to which the company's products belong (this process requires both support from industry data research companies and field experience). From an industry perspective, is it in a period of crazy expansion, orderly competition, stable competition, or monopolistic competition? From the perspective of market capacity type, is it an incremental market, a stock market, or a shrinking market? From the perspective of competitive landscape among companies, is it overall stronger than main competitors, alternating, fiercely competitive, or overall weaker than main competitors? Without starting from a global perspective and clarifying this information, the next step of formulating strategies and tactics will likely have problems.
When advancing a cause, if you have a clear blueprint in mind and believe that "(the cause or project) will definitely progress this way," then you have half the success. The terrible thing is that many so-called executives (especially those who switch industries) treat operational inertia as experience, and experience as process. They are a "hammer" and go to a new company looking for "nails" everywhere. With insufficient global vision, the company is doomed.
Ability to Balance Sunk Costs and Opportunity Costs
What are sunk costs? When people decide whether to do something, they not only consider whether it is beneficial but also whether they have already invested in it in the past. We call these incurred and unrecoverable expenditures, such as time, money, and energy, "sunk costs." The concept of "sunk costs" is used in economics and business decision-making, referring to costs that have been paid and cannot be recovered.
What are opportunity costs? The cost of forgoing the opportunity of another business activity when a company engages in one business activity, or the income forgone when using certain resources to obtain a certain income. The income that another business activity could have earned or another income is the opportunity cost of the ongoing business activity. Through analysis of opportunity costs, companies are required to correctly choose business projects, based on the principle that actual returns must be greater than opportunity costs, so that limited resources are optimally allocated.
How should corporate executives balance these two costs? My feeling is: Examine opportunity costs to make investments more scientific; forget sunk costs to make decisions more rational. We often see that when people lose money on investments, they often fail to stop losses in time because they feel sorry for the initial investment, and may continue to add investment, eventually making more mistakes and losing more. This is the greatest power of sunk costs affecting rational decision-making.
Common examples: When a company promotes a new product, the initial investment in product development, market promotion, etc., is huge. If there is no improvement after two to three years, should the executive decide to give up or continue investing? It is like seeing the success of Nongfu Spring's decade-long promotion of Oriental Leaf and believing that as long as you persist and the direction is correct, you will succeed, but ignoring whether you have enough "sunk costs" to invest. What if the capital chain breaks midway? Also, ignoring that before Oriental Leaf, Nongfu Spring also launched many tea drinks similar to tot, and gave up decisively if there was little improvement in a year or two.
From a time perspective, considering sunk costs, the value of things can be divided into three parts: past value, present value, and future value. Corporate executives should clearly distinguish the value of different time periods and not confuse them.
From a choice perspective, considering opportunity costs, the value of things can also be divided into three parts: potential opportunities, certain opportunities, and uncertain opportunities. Corporate executives should clearly know which opportunities are most valuable to them and not misjudge them. This choice is difficult, but corporate executives must possess such comprehensive literacy.
Pessimists care about sunk costs; optimists consider opportunity costs. Inferior people value sunk costs; confident people focus on opportunity costs. As the old saying in the stock market goes: Pessimists are often right, but optimists often succeed.
Strategic Thinking Ability
What is strategy? First, strategy concerns survival issues, the survival of the enterprise, the survival of the country. If it does not involve life and death, it can only be called planning. Second, strategy is a long-term goal, guiding direction, with a time span of more than 3 years, 5-10 years for small scale, and 20-50 years for large scale. Finally, the content to consider in strategy is related to the overall situation, and what can affect the overall situation must be the most essential things, not specific or detailed ones. Therefore, a person's strategic ability lies in discovering the essential things that affect the life and death of the organization and being able to unswervingly persist in them. If you do it, you live; if you don't, you die. This is the true goal of an organization. How to achieve this goal is a tactical and means issue.
Executives must have a strategic vision higher than that of employees. Because executives are leaders. You must have direction in your heart to ensure the team is on the right path; you must see far to avoid traps and obstacles on the road, so that everyone does not fall into pits or be hindered in progress. If an executive lacks strategic vision, focuses only on their own small area, lacks a big-picture view, and sees only trees but not the forest, it is difficult to achieve great things. The most terrible thing is that if this executive lacks strategic vision but has strong execution, once the direction is wrong, they may lead the entire team into a pit.
For enterprises, anyone entering management should gradually cultivate strategic thinking ability. If at the director level there is no strategic thinking ability, the execution of the enterprise will be greatly reduced. Because managers connect the upper and lower levels, without strategic thinking ability, they cannot catch the ideas passed down from above, nor can they refine many frontline situations and effectively pass them upward. At the same time, middle management should be involved in the strategy formulation process. Sharpening the axe will not delay the cutting of firewood. Involving them more in strategy formulation actually greatly improves execution efficiency. Because they understand the logic and background of a certain strategy formulation and have a sense of participation, they can execute more proactively.
I personally experienced the transformation of Nongfu Spring from 2013 to 2015, from the traditional distributor model to the current exclusive distributor contracting model for channel coverage, and the transformation of Jinmailang Beverage from 2015 to 2017, from the traditional distributor model to the "hitchhiking" model and finally to the "four-in-one" model for channel coverage. I witnessed the entire process from 0 to 1 and from 1 to 100. The arduous journey is still vivid in my mind today. All transformations are the crystallization of executives' strategic thinking ability. They continuously try and summarize, leading the company step by step to the industry's forefront.
Final Words
Too many people have the addiction to be leaders, but lack the ability to lead. In fact, most people want to be leaders because it represents a kind of career success. The above three abilities are essential for corporate executives. Without a global vision, you cannot see clearly who you are competing with and what the competitive environment is; without the ability to balance sunk costs and opportunity costs, you will be indecisive and uncertain in important choices; without strategic thinking ability, you cannot determine where the company is heading in the future. Of course, there are no born executives. Most corporate executives are promoted from the grassroots or middle level, or they switch jobs. Therefore, continuous learning and exploration are the only way for executives to stay relevant, and the best choice for corporate development.