---
title: "Solving Money-Can't-Buy Problems with First-Class Management"
description: "The business partner mechanism is a product of the current era, adopted by many entrepreneurs because it supports enterprise development. It is not a one-size-fits-all solution; success cannot be simply replicated, but understanding the method can improve corporate management."
author: "张文锋"
publisher: "New Distribution"
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published: "2017-11-29"
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# Solving Money-Can't-Buy Problems with First-Class Management

> The business partner mechanism is a product of the current era, adopted by many entrepreneurs because it supports enterprise development. It is not a one-size-fits-all solution; success cannot be simply replicated, but understanding the method can improve corporate management.

The business partner mechanism is a product of the current era, and the reason it is followed by many entrepreneurs is that enterprise development requires its system support.
**1. Large enterprises use management, small enterprises use mechanisms**
Management is a practical discipline, and there are no true experts in it. The business partner mechanism is not suitable for all enterprises. **No successful model can be simply replicated; only by understanding the method can we achieve the goal of improving corporate management.**
In fact, the business partner mechanism is not equivalent to equity incentives, resource integration, or benefit sharing, but rather uses an Internet-based decentralized thinking to help enterprises build internal and external industrial ecosystems, and to cooperate with value creation stakeholders such as capital, technology, and intelligence, forming a division and collaboration mechanism of shared responsibility, co-creation, and sharing.
In reality, each stakeholder has different demands: some want cash, some want equity, some want social prestige. **The business partner mechanism is effective only if it meets the needs of all participants.**
**1. Talent cannot be simply solved with money**
Sustained growth is the eternal theme of enterprises. In managing an enterprise, technology can be purchased, capital can be introduced, but only talent and teams cannot be simply solved with money.
Many enterprises, even after introducing a large number of excellent professional managers, still have poor operating conditions. The fundamental reason is that they have not formed a talent team.
The business partner mechanism does not incentivize individuals, but rather teams. Teams must share responsibility, co-create, and share, then form division and collaboration.
The so-called "how many talents you have determines how large an operation you can manage" means that many enterprises' final operating scale is not limited by technology or production capacity, but by talent, lacking suitable managers.
Every enterprise should have four types of essential talents: **professional and technical talents, business and marketing talents, management and operations talents, and capital and financial talents.**
Taking a provincial Thousand Talents Plan as an example, more than 400 target talents were introduced, but very few enterprises were successfully incubated. The fundamental reason is that the essential talent team was not formed. Using a hundred-point scale as reference, professional technology scored 120, marketing business scored 0, management scored 20, and capital scored negative, with extremely uneven talent distribution.
Including the mixed-ownership reform of Chinese state-owned enterprises, the key to introducing private capital lies in completing two things during the introduction process:
**A. Complete the comprehensive integration of essential resources;**
**B. Solve the incentive problem for key positions and core personnel internally.**
Therefore, whether state-owned or private, only by forming a mechanism of shared responsibility, co-creation, and sharing among the four types of talents can everyone's vitality be stimulated and the momentum for everyone to strive for themselves be activated.
This is the essence of the business partner mechanism.
**2. Avoid the situation of "the boss pulling the cart alone"**
When the enterprise is small, the boss is the "cart puller". When the enterprise reaches a certain scale, the boss should become the "driver". But contrary to expectations, the situation of "the boss pulling the cart alone" is difficult to change in many enterprises.
We hope that through the business partner mechanism, every essential talent becomes a carriage of the high-speed train, and each carriage is a source of power for enterprise development. Only then can such an enterprise run at 250 km/h, 350 km/h...
Many enterprises have a misconception: only when employees create good performance will there be a good mechanism. In fact, this logic is wrong. **It must be that first-class mechanisms attract first-class talent, which then creates first-class performance, and first-class performance further forms even better mechanisms, entering a virtuous cycle.**
It should be noted that first-class mechanisms do not equal high annual salaries. The partner mechanism is an "expectation" generated by joint struggle. Even with low salaries, if the mechanism is recognized by employees and forms the motivation for employees to strive for themselves, and they form a division and collaboration relationship with each other, it can still form a high level of incentive for employees. This is the result of our practice in many enterprises, not just theoretical research.
**3. The "troika" of business management**
It is far from enough for an enterprise to rely solely on internal development; it also needs to integrate externally. However, after completing external integration, it is found that enterprises that were originally developing well are experiencing continuous declines in efficiency.
The reason is: the original acquired enterprise's boss was working for himself, but after acquisition, he became working for others, so the motivation was no longer as strong as before.
**Therefore, the best situation for controlling a company is to operate it directly, sending a "troika": general manager, human resources, and finance.**
If the dispatched team conflicts with the existing team of the original company in terms of culture, system, and rights, relevant mechanisms need to be adopted to resolve the conflict. For example, the acquirer and the acquiree each give up a portion of equity, distributing it to the dispatched team and the backbone of the original team, and after the company goes public, the equity is repurchased.
That is, regardless of who holds power, as long as the original company's performance can be improved, through the business partner mechanism, it becomes a matter of aligning interests.
**4. Shared responsibility is the foundation of the business partner mechanism**
The business partner mechanism must first have shared responsibility; otherwise, there is no co-creation, sharing, or win-win.
Partners at different levels have different pursuits and needs, generally divided into three categories:
**A. Community of destiny: responsible for the overall company**
**B. Community of cause: cooperative relationship, responsible for partial aspects**
**C. Community of interests**
Turning all employees into partners is wrong and unsustainable, because different people have different pursuits, and different levels have different positioning and goals, so they cannot be incentivized at the same level. Those who want short-term benefits do not take long-term, and those who want long-term do not take short-term.
**5. Three major drawbacks of traditional equity incentives**
**A. Prone to "free-riding" phenomenon;**
**B. Low incentive effectiveness;**
**C. Cannot guarantee fairness.**
Some listed companies' equity incentives not only fail to achieve the goal of motivating employees to work hard, but also have the opposite effect. The reason is: listed companies' equity incentives are not strongly correlated with the actual results of employees' efforts, and stock price fluctuations have little correlation with employees' efforts, leading to employees losing work motivation.
The business partner mechanism makes individual work not fluctuate with stock prices. Each partner can calculate the increase in benefits brought by their own efforts, and this incentive effect is the strongest.
In addition, there are two major obstacles to the implementation of the business partner mechanism:
**First, the capital contribution of partners;**
**Second, existing assets cannot be distributed; only incremental assets are distributed, not existing assets.**
Therefore, distributing on the increment is in line with the relevant system of business partners.
**6. From "enterprise operation" to "industry operation"**
The biggest problem in industry operation is the difficulty of integrating industrial operation essential resources, and the resulting increased operational risks.
Transform all stakeholders in the industrial chain: upstream (suppliers), downstream (agents), government, research institutions, financial institutions, and even competitors into business partners, leveraging each other's "long board effects" to achieve a win-win outcome.
**7. Ensure legality**
The establishment of the business partner system requires full consideration and resolution of practical issues such as the Company Law, Securities Law, Partnership Law, and accounting standards involving horizontal competition, related transactions, tax costs, partner capital contribution methods, transaction structures, and risk prevention. It is a systematic and rigorous project.
Relying solely on theory and sentiment is the practical reason why many enterprises cannot effectively implement the business partner mechanism.
**8. Combine culture and system construction**
The business partner mechanism also requires the combination of "cultural construction" and "system construction", and can only truly exert its powerful force when based on "shared aspirations, cooperation and sharing, resources and capabilities".
A system without culture is soulless; a culture without system is powerless.
Some companies overemphasize benefit distribution while neglecting the establishment of awareness of shared responsibility, co-creation, sharing, and win-win.
**2. Make employees as motivated as "spending their own money to do their own things"**
The progress of human society stems from the establishment of division systems and the optimization of division and collaboration mechanisms. Division theory is divided into three stages:
**1. Do it yourself**
"Do it yourself" is mainly for family workshop enterprises. Since it is "doing it for yourself", enterprises in this stage have high work efficiency and fast growth.
**2. Hire others to do it**
As the enterprise scale continues to expand, doing it yourself can no longer meet the development needs. At this time, it is necessary to hire others to do it, successively establishing human resources, finance, marketing, production, market, and brand departments.
**3. Delegating power to professional managers**
Based on the principal-agent system, the boss can delegate power to a professional manager, allowing the professional manager to manage the enterprise on behalf of the boss.
There are four modes of division:
**A. Spending your own money to do your own things: highest efficiency;**
**B. Spending your own money to do things for others: selfless dedication type;**
**C. Spending others' money to do your own things: corruption;**
**D. Spending others' money to do things for others: the lowest efficiency mode globally.**
The fourth mode is the biggest drawback of the principal-agent system.
Before employees receive shares, when making budgets, they need to hire more people. Once they become shareholders, they will think that the enterprise does not need too many employees, and layoffs are the correct behavior.
Therefore, it is necessary to use mechanisms to transform employees' thinking from "spending others' money to do things for others" to "spending their own money to do their own things".
**3. Seven transformations and four major elements of the business partner mechanism**
**1. Seven transformations of the business partner mechanism**
**1. Transform the boss from one person into a team;**
**2. Transform independent operations into group operations;**
**3. Transform various scarce capabilities from fighting alone into 1+1+1=111;**
**4. Transform employees into bosses;**
**5. Transform professional managers (workers) into entrepreneurs;**
**6. Transform the community of interests into a community of cause and community of destiny;**
**7. Transform passengers into strivers.**
**2. Management areas involved in the business partner mechanism**
**A. Top-level design and essential integration**
**B. Strategic planning and capital operation**
The role of the capital platform is to amplify incremental value. After a company goes public, it can obtain capital premium. Enterprises without a capital platform (listed company) have a smaller incentive effect from the business partner mechanism.
**C. Governance structure and organizational structure**
Strategic errors can be corrected, organizational issues can be adjusted, human resources can be optimized, but only the governance structure is irreversible. Once wrong, adjusting it requires starting over, wasting a lot of time costs.
**D. Incentive mechanism and distribution mechanism**
Incentive mechanism is not equal to distribution mechanism.
**4. Essential talents needed for enterprise development**
**1. Professional and technical aspects**
One type is technical experts; another is technical organizers, i.e., talents who can integrate relevant resources, complete technology development, and implement technology routes.
**2. Business and marketing aspects**
Talents who can independently take on existing positions, do market planning, develop sales channels, and expand sales scale.
**3. Management and operations aspects**
Talents who can independently manage subsidiary operations, build management systems, build teams, and construct systems and processes.
**4. Capital and financial aspects**
Talents who can independently take on capital platform operations, investment platform construction, have the organizational capability for industrial fund raising, investment, management, and exit, and have experience in listed company capital operations.
An enterprise consists of two parts: business cycle and capital cycle. Having business value does not necessarily mean having capital value.
**5. Industrial chain integration**
Related to industrial operations, upstream and downstream of the industrial chain, competitors, capital resources, government resources, service resources, and social resources are increasingly valued by enterprises.
**1. Suppliers and agents**
Originally, the relationship between enterprises and suppliers was a simple purchase relationship, with only basic short-term price games, and even potential corruption, requiring the introduction of relevant audits.
Now many enterprises, in terms of industrial chain extension, transform the original simple transaction model into a supply-side integration platform that relies on long-term capital appreciation and sharing. Similarly, cooperate with agents in the same way.
**2. Competitors**
The relationship between enterprises is no longer a simple competitive relationship, but is gradually transforming into a "co-opetition relationship", and cooperation far outweighs competition. In strategic emerging industry markets, the incremental space is so large that no single enterprise can occupy it alone.
By reasonably using the partner mechanism, competitors can also become business partners. In the future, including government, third-party service institutions, and other enterprises, will no longer be simple game relationships, but will eventually transform into business partner relationships.
This view is gradually becoming an industry consensus, moving from earning short-term profits to common enterprise development.
**6. Basic conditions for forming business partners**
**1. Shared responsibility**
**The business partner is not a sharing mechanism; it must be based on shared responsibility. Shared responsibility requires both willingness and ability, and both are indispensable.**
Therefore, business partners must have a shared responsibility mechanism. If a person does not even have the willingness to share responsibility, even if they have ability, they cannot become a partner.
When truly promoted to the shareholder level, it will be found that many excellent R&D personnel and marketing personnel actually lack the ability and willingness to bear pressure.
**2. Co-creation**
Common value creation must pay attention to division and collaboration. It is not that if everyone becomes a partner, the enterprise's efficiency will improve.
Only after various essential links are configured in different segmented fields and produce synergistic effects can the business partner mechanism play its due role. That is, partners have different strengths and produce synergy with each other, and entrepreneurship can succeed.
**3. Sharing**
Complete the sharing mechanism through the design of transaction structures.
Conditions that business partners should have:
**1. Shared aspirations**
Shared aspirations mean having a common business theory, values, sharing spirit, and goal achievement expectations. Only then can everyone work together in one direction.
Therefore, only with strategic recognition can one become a business partner. Do not turn business partners into "a gang", which loses its due value.
**2. Cooperation and sharing**
All projects must require first-level partners to participate in operations together to produce synergistic effects. Everyone's professional division is different, so projects must "unite to fight the world", cooperate and share.
If any person can complete a project without others' help and can do everything alone, then this person should leave the team. Because this person does not need the team, and the team does not need this person, and no synergy can be produced between them.
**3. Resources and capabilities**
If a person's abilities and resources do not match, with too large a difference, it will lead to this person being unable to survive in the organization.
Long board theory:
The barrel principle is a pseudo-concept. In a relatively closed market environment, because external support cannot be found, one can only rely on oneself to make up for shortcomings.
But in a market where co-opetition is the mainstream, the "long board theory" is more applicable. Any enterprise or individual cannot build all core capabilities in the short term; to develop rapidly, they must cooperate with others.
Therefore, everyone is a long board. Relying only on oneself cannot hold water; several long boards must be combined to hold water. This combination method is to distribute according to the equity structure, allowing each participant to play to their strengths.
Notes for designing the business partner mechanism:
**1. Clear strategic orientation**
**2. Business maturity**
**3. Distribute benefits, not power**
**4. Transaction structure design**
**5. System + culture, consensus is most important**
**6. Incentivize around strategic elements, avoid egalitarianism**
**7. Support of capital platform**
**8. Incremental distribution principle**
**9. Relevant provisions of Company Law, Securities Law, Partnership Enterprise Law, and practical operations**
**10. Avoid disconnection between contribution and reward.**
Source: Notesman (ID: Notesman)
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