How do traditional enterprises face the Internet challenge?

Today, I want to share a few key words that have been done over the internet for so many years. My speech today, please the conference organizers to give me a mosaic, because one example will offend some people.

Sharks and deserts: how do traditional businesses face the internet?

Let me give you a few examples. For example, whether it is Taobao, cat, or Jingdong Mall, the traditional retail industry challenges. Everyone can feel it. Again, such as communications operators, such as telecommunications, mobile, Unicom, these powerful state-owned enterprises by Tencent with a simple micro-letter, less than 3 years time, basically subversive.

Today many traditional newspapers and magazines, regardless of their income, readership, are declining. Newspapers and magazines have been replaced by microblogs, micro-letters and various news clients. Traditional TV stations are losing young viewers, and two years from now, people don't have to watch TV every night and watch the same show from 7 o'clock to 7:30 every night.

Recently, the internet has rushed into the industry of television manufacturing. Recently, a lot of home appliances manufacturers asked me to do exchanges, I said in earnest: used to do home appliances, how the competition has a bottom line, we no matter how many are still some profits. Now, the Internet's savages rushed in and there was no bottom line-the price was not the lowest, only lower. Many of the big guys who have been in the TV industry for 10 and 20 years are confused.

I just feel that this is the worst of times and the best of times. For the traditional large enterprises, they face the internet, like the face of the great martial arts-"Sunflower Treasure", the mood must be very tangled. Feng this tangle called "left hand hit right hand", but I feel not so gentle. In fact, if the traditional enterprises want to succeed, the internet has asked them a question: do you dare to be from the palace?

Of course, the larger the enterprise, the larger the body, since the palace is particularly painful. The last page of "Sunflower Treasure book" wrote, even since the palace, may not be successful. I'm now teaching a lot of business. The development of the Internet today, SMEs can completely have the opportunity to reverse attack. We all use the idea of the Internet to arm themselves, not only from the palace, but also a lot of large enterprises.

Some traditional enterprises in the face of Internet challenges, experienced a particularly complex mental process.

The first stage is called contempt. They think the internet is a small play, can not become the atmosphere. We've been in this business for decades. Soon they found that the internet did not kill the people, but also toss the more and more exciting, they entered the second stage: not clear. So, prepare to study. They felt dazzled. As the saying goes, the layman watching the doorway, for many non-internet traditional enterprises, because they do not understand the rules of the Internet game, so enter the third stage: do not understand.

Why? Feng said that values determine the direction of an enterprise. The more successful an enterprise is, the more successful it is in shaping its genes. You teach the sharks in the sea every day, how to fight a leopard in the desert, this is what sharks can not understand anyway.

Some enterprises after a period of time, really determined to start reading the Sunflower book. However, the new animal is to eliminate the old animals. When many companies hesitate to enter the Internet, the pioneers of the Internet have been found to have run to the front.

Many enterprises have some misunderstanding, feel that using the Internet, is not to spend money to buy technology? The internet has many big concepts, many people talk about the internet is cloud computing, big data, social network, mobile terminal, as if you spend money, bought the technology of the Internet, become an Internet enterprise. Actually, I think those are some tactics. I think that in order to face the challenges of the Internet, we must master several basic values of the Internet. They are different from traditional business.

The first, you know, the Internet age is an era of eliminating information asymmetry, is an era of information transparency. In the internet age, consumer behavior has changed. You notice that in the absence of the Internet in the traditional period, the relationship between the merchant and the consumer is based on information asymmetry. In layman's terms, buy the essence without selling.

In traditional business, it is said that the client is God. In this economic relationship, there are only two dimensions: one is a merchant, the other is a customer. Who is the customer? He is the God who pays me. This is the rule of the game of the traditional economy.

A variety of marketing theories, through product packaging, advertising promotion, promotional sales, is a goal, is to sell things to customers. But, with the Internet, the rules of the game have changed. Consumers are becoming more and more active and have a voice. This is based on asymmetric information marketing, the effect will be less and less, and the user experience will become more and more important.

Today, all products are highly homogeneous. You provide to the user, the past is a function, and then to meet the needs of users, and then further said to create value for users. But in the end, you find that the decisive factor in winning is actually the user experience.

From the customer experience to the user experience

What is the user experience? For example, suppose that I open a bottle of mineral water, after drinking, it is really mineral water, this is called experience? It is only by putting one thing to the extreme that it is beyond expectation that experience is called. I have a joke, such as someone handed a bottle of mineral water, I drink the original is 50 degrees of Maotai. This is beyond my experience. Assuming it does happen, this is a good user experience. I would say everywhere, I go to where the meeting, I opened a bottle of mineral water, the result is Maotai. I also want to write a microblog, absolutely forwarding more than 500 times.

Only experience can be deeply rooted in people, in order to truly allow users to produce emotional identity, to produce word-of-mouth communication. What's the most subtle thing about experiencing this? It's how much you advertise and you can't solve the problem of experience. You advertise, your home TV, refrigerator blowing with the hype, but your ads can not replace the user experience, because the experience is the user's own feelings. Users go to the Internet to spit, or to praise you, this is not your decision. I told the traditional manufacturers, now the rules of the game has changed, you put the user's money, you sell to him, you hope this user is best not to come to you. Later, you sell to the user or to the user, your experience has just begun, the user has only just begun to deal with you. You want to pass through your products and services, so that users can perceive your existence every day, so that users feel your value.

One might ask: Why is it the user experience, not the customer experience? On the Internet, it is not the people who pay for your things, but the people who use your things are God. On the Internet, you don't have to figure out the money in other people's pockets, and don't spend too much effort on advertising. The first thing you have to think about is that even if he doesn't pay me, I can let him know that I'm using one of my products or services. Users and customers, only one word, but I think the difference is very big.

What was the biggest shock to you when you first got on the internet? There are a lot of things on the internet that are free. Free to see the news, free e-mail, free chat, free search, not only do not have money, even pay the money to welcome you to use, but also the quality of service to do very well.

The reason is very simple, free is the spirit of the Internet. From the business game rules, the Internet products and services, although the ever-changing, but the mode of earning money is actually three kinds, but the prerequisite is that there must be a huge free user group:

The first way of earning money is to use the Internet to sell things. If you sell real things, you can call it e-commerce. If you sell virtual things, such as selling funds, selling stocks, selling financial products, you can call it Internet finance. Aside from these concepts, the first way to earn money is to use the Internet as a platform, do or traditional business, it just played the characteristics of the Internet, is the power of the network.

The second type is advertising. If your service doesn't make money, but you have enough eyeballs and enough users, you can recommend other products and services to them, which is actually advertising.

The third type is the value-added service model, the most typical online games. You can charge a value-added service charge to some users of a free user. For example: In a online game, there may be 10,000 of cock users are free to play, suddenly a high handsome. He thinks he is different, he wants to be the lead eldest brother, so he will spend a lot of money, buy a horse ride, buy a sword to be slung, still want to give cock silk of pay. He felt that he was respected in this space, where is the eldest brother demeanor, there are 10,000 younger brother followed by not uncommon. To earn a handsome money is a value-added service. If you don't want to spend money, you can continue to be a bitter miner and farmer in the game.

Over the years, the cattle of internet companies can not escape these three modes of income, but only if you must find ways to get the largest user base. Why do Internet companies choose to sell funds online? Because the larger the user base, the lower the cost of contacting each user. A website only 2000 people visit each day, you want to sell ads, no advertisers to pay. In addition to value-added services, do not fantasize that you have 10,000 of the user base, you can earn the 10,000 people's money. The rate of online games is now less than 5%. Today on the Internet, any value-added service has only a percentage of the rate of payment. That is to say, only if you have a huge user base, it is possible to construct a charging pyramid. If you don't even have a base for this pyramid, you just have to pay users and don't want to serve the free users on the base.

This is the rules of the Internet game, it determines the one I often say: if you want to gain business interests first, you have to consider how to create user value. In the Internet, the real development of enterprises, even if some enterprises are not good for peers, even if some enterprises are controversial, but no enterprise dares to offend their users. You only have to find ways to provide users with high quality services, even free services, to turn them into your user base, you will be able to build business model.

This is the second keyword I want to talk about: the user experience.

When you decide to enter the Internet, even if you do not understand, do not think of the first to make money, or the traditional business simply copied to the Internet, or simply the Internet as a distribution platform, promotion platform. This is not a real understanding of the Internet. You should seriously consider how to use the Internet to create more value for users so that you can get more users than by traditional means.

The free business model is to extend the value chain

The third keyword is free.

We each have innate fear of free, and we do not believe that there is a free lunch in the world. In real life, even if you send a bottle of water, the more users you serve, the higher your costs. Even if the water is free, it has a cost of a bottle and logistics. Therefore, in real life, free services, free products can only be a marketing tool. Free tasting and free tasting are staged.

The Internet has a feature, Internet products and services are virtual, digital. Research and development costs are fixed, the product can be downloaded free of charge, the site can be accessed free of charge. If your cost is 10,000 yuan, there are 10,000 people to use, the cost of amortization to everyone is 1 dollars. If 100 million people are used, the cost of spreading to everyone is almost negligible. However, with 100 million of users, whether it is e-commerce, value-added services, or advertising, each user has to give you the opportunity to contribute to the income, he may bring more benefits than he can share the cost. As a result, the free model of the Internet is not only feasible, sustainable, but also creates new business models. So, free on the internet is not a scam, and many internet companies have great success is based on free. Once you launch a free product, if its quality goes beyond those charged products, it's a huge impact on the user experience. It is one of the most advantageous ads, and it surpasses all advertising and marketing tools.

For example, Ma Yun announced that businesses can open a shop in Taobao free, businesses in Taobao's competitors there to open a shop is to pay. So, do not open white not open, whether there is no buyer, businessmen are willing to build a shop on Taobao. So, the sellers are gathered to Taobao up. With the seller there is a buyer. I think Ma Yun in announcing Taobao free time, he also may not want to know how to make money after free. Finally, when a large number of sellers to open a shop on Taobao, you found that a search of toilet paper, can search out 10,000 results. Free shop is fine, but if you want to put your own toilet paper in front of the search results, you need to pay a value-added service charge. Today, Taobao is one of the most lucrative internet companies in China, a free business model.

Let me give you another example. We all use micro-letters. Some time ago, a lot of people argue that the micro-letter is not to charge. I'll tell these people that you don't understand Tencent, Tencent is an internet company, using the rules of the Internet game to see. Why is it disruptive to operators? Because the micro-letter to the carrier charges of SMS and MMS for free.

Why do people like to use micro-letters? Just because it makes the experience better than the text, and free. As long as you have the flow, you have WiFi, you do not need to dig SMS money, send a photo does not need to pay for MMS 5 cents or 1 dollars. As a result, the micro-letter quickly to the carrier from the level of communication to kill.

However, the traditional enterprises to see the Internet Free mode, will be the internet business as a liar, think you these crooks, must be free to kill us, and then charge. This is the traditional view of the Internet, this is wrong. Who dares to charge on the Internet, we have a lot of people waiting for free.

The free business model on the Internet is to allow you to extend your value chain. You are free of charge in other places, then you need to find a way to create new value chain to charge. Do you understand? Micro-letter will not charge your communication fees, you use micro-letter every day, Tencent is a huge user base. However, Tencent as long as in the micro-letter to promote the game, so that everyone hit the plane, in which you recommend goods, it can easily earn more than China Mobile each year to collect the message fees more money.

This is the subversion and destruction of the traditional internet, which undermines the traditional business model while creating a new value system. When we were 360 safe, we were the least safe people. Internet people, like a bull rushed into the porcelain shop, or to kill the old master. We do not know the safe rules of the game, rushed into the field, feel that security is what everyone needs. So many trojans, viruses, fraudulent web sites, we also pay to pay protection fees, this is certainly wrong, should be free to do. You said I was looking forward to the future of the business model? To be honest, we didn't know that at the time. Feel free may be easier to attract users. Sometimes, you talk to users of good technology, users do not understand. You talk to users of their own things good, but users do not try, how to know your things good? We decided to make it permanent and free for life.

What is the sign of subversion? I found that there is a test standard is that the user said well, peers not only say no, peers also scold you. The louder the sound, the more you know that the subversion of an industry is about to begin. When 360 began to do free antivirus, the traditional antivirus manufacturers really do not understand, said we sold 20 years anti-virus software, how can you Zhou free to do it? They believe that Zhou is a liar.

China hates me most, is not to do the virus Trojan those Mafia's younger brother, hates me most is the colleague. I left my peers with billions of dollars a year. They call me 250 today, and they are very kind. At that time, a lot of anti-virus software in the home page stickers character, Red Headline said: Zhou rely on what survival? must be stealing bank account every day.

Go to today, these antivirus manufacturers finally understand: Free is the general trend. Those who did not follow the manufacturers, basically have to rest vegetables. What about the vendors that came with them? Although still scold 360, but now all follow the 360 study. The security market as a whole is 100 times times bigger than it used to be. Before 360 comes out, the security company has a few billion income already is No.1, but does not have the strength to contend with the foreign security enterprise. China's internet users at the time, 4, 500 million users on the Internet naked, enterprises have the power to solve this problem.

But, in this free mode, a lot of people ask me how do you make money? With what I just said, if I only do free antivirus, honestly, really do not make money. Some people say you do not play ads, we specialize in killing Luantan ads, okay? Of course, sometimes there are risks. That year, we provide users with a free tool called QQ bodyguards, so that we do not have to spend money, also do not need to see Tencent every day to play the ads, the result we were accused to court, to compensate 5 million.

Therefore, the meddling also has to pay the price.

What is the free business model? is the extension of the value chain. We did not stay on only antivirus, I made a secure browser and secure the App store. Because of my free security, free antivirus to bring me 90% of users in China, so there are a considerable proportion of users using 360 browsers, using 360 mobile phone assistants to download a variety of mobile games, mobile software. This creates huge traffic. With the flow, you can generate search, navigation and other advertising models.

Many people use the browser to play the game, 360 to the players to promote some games, to the user charges, this is value-added services. Advertising plus value-added services, which became 360 of the business model.

When we came to the U.S., the biggest challenge was to clarify the 360 business model. 360 of the business model is indeed unique in the world, is the model of Chinese creation. The model was so difficult to communicate with Americans that it was easy to get to the market and was shorted eight times in a row. They think, this kid does antivirus software, but he does not sell antivirus software, that income from where? Then his income must be false. So, when you do free innovation, it is very powerful, but this innovation sometimes have to face a lot of misunderstanding, even face a lot of attacks.

The traditional business model can learn from the free spirit

Today, we have noticed this trend, television, boxes, home appliances, will be combined with the Internet. What is the concept of free hardware? That is, after a lot of hardware, it can't be zero price, but it is 0 profit. In other words, Internet hardware is sold at cost price. What costs can the Internet cost the enterprise? On the Internet, as long as the thick-skinned, as I dare to make a shooting, or you dare to wear jobs clothes on the stage, you can get the eye effect, do not need to go to CCTV to buy the king. E-commerce to connect you directly with users, you can engage in user reservations, do not worry about the inventory. You don't need middlemen, and middlemen take half the profits. You have no middleman, and after you have no channel, you can make it beneficial to the user.

This for the future only hardware manufacturers, is basically a disaster. Why Internet hardware can not make money? That's because the hardware is no longer the only link in a value chain, but it becomes the first ring, the window that I interact with the user, and it becomes the bridge between me and the user. Businesses are counting on users to use my fridge, drive my car, watch my TV, and try to provide other services every day. What is the biggest challenge for traditional manufacturers? is to learn to use the idea of the Internet to do follow-up services. If I were just a manufacturer that would make hardware and sell hardware, your value chain would have been lost for free. You may end up as a foundry and earn a meager profit. The high end of the value chain will be taken away by vendors doing information services and user experience, which is not alarmist, it will not happen immediately, but will see this trend in the next five years.

If you want to embrace the Internet, I hope that you think again, you are not really the user first written in the slogan of the enterprise, you really think what users are. Even if you do something good for someone who doesn't pay you right now, your core value is not necessarily free.

I have just talked about the free business model, will you be able to do it for free? Can free bring a huge amount of users to multiply it? When someone is free, you must not make a simple conclusion: let the grandson lose the light! If you think about it, the internet is free to kill a lot of huge businesses. Micro-letters killed telecoms operators less than three years ago. That year to pay treasure free handling fees, so many people became Alipay users. At that time, how many people think, today Alipay can gather a lot of money can do balance treasure, can enter the fight gold? Internet Free is really free, you don't feel free things must be deceptive. The smart phones that everyone uses today, except Apple, are actually Android. Android is a free mobile operating system. Wiped out companies such as Microsoft, Nokia and motorcycles.

Don't underestimate the power of free.

I would also like to add that the more free products, the lower the cost of users to choose, the cost of user abandonment is particularly low. I spend 10,000 yuan to buy a refrigerator, this refrigerator is not easy to use, I am not good return. On the Internet, users use your things, a little mouse, and run away. The more free things, sometimes instead of the user experience in the first place, you have to find ways to do it to the extreme, and even do better than the charges. You think, if you can make a thing better than the charges, experience, and free, you even a small business, as can be invincible.

Pull innovation from the altar

Finally, I want to say a question, I have studied for a long time innovation, my controversy also comes from this. I'll talk about it everywhere. Subversion is innovation, disruptive innovation. As you know, these two words are sensitive words in our country, subversive and destructive. One time, a leader patted me on the shoulder and said, "Little week, our country says that innovation is good, but later subversion and destruction will not be said." I can't find a more appropriate word to translate. But I've always thought that for many of our founders, you have to innovate even at a tiny point. Because if you follow the rules of the giant's game, you'll never be the same, just food and clothing.

However, in China, subversive innovation is easy to be seen as a troublemaker, a troublemaker and a troublemaker. It sometimes takes courage to do subversive innovation. I recommend a classic textbook of subversive innovation, called the dilemma of innovators, a set of Citic Press. I read the book once a year because the deeper the experience, the greater the gains from the book.

One thing I've been doing is trying to pull this innovation from the altar. Innovation is not a great theory, it's something every cock can do. I also found a lot of cases, but also with the exchange of people. I use two most popular words, to make a summary. Subversive innovation is three kinds:

The first is that you really invent a new kind of raw material. For example, you invent water to change oil at home, this is absolutely subversive, "two barrels of oil" must kill you. This technique is difficult, many people have been doing it for many years, and they have not studied the technology of water changing oil. and a perpetual motive. The United States in recent years, the original technology has become less. To invent something that no one else has done, and to be honest with you and me, at least for the strength and scale that we have now, we may not be able to do it.

In the United States, in China, subversive innovations are increasingly appearing in two ways. One is the innovation of the user experience, the other is the subversion of the business model. Business model subversion, with the old saying, is that you put the original very expensive things, can find ways to reduce the cost of particularly low, even the original charge of things become free. This is a huge reversal, of course, not overnight. A lot of disruptive innovations just came out of the micro-innovation. I'm afraid you don't even realize that you're doing this to subvert an industry. To the leaders of the industry, they must be looked down upon, can't see clearly, can't understand. If you have just come out, they will understand, it must not be your chance. They must carry the power of human, material and binding to kill you.

I said Taobao, micro-letter, 360, this example is too much, free business model, including I speak today of the Internet phone, Internet hardware, subversion is very powerful.

What is the innovation of user experience? Is that you make it simple to have a complicated past. You put the past a very difficult thing, may need to learn things, become a no-brainer can be used, is actually a simple force.

Many people do not understand my point of view, many people always feel that they have to do something other people did not do to prove my cow. If the user does not recognize, you can not overturn the technology of cattle. For consumers, you want to do a huge consumer market, if you can reduce the threshold, just said one is the threshold of money, one is the threshold of the use of barriers. It can produce the power of miracles.

Let me give you an example of what you know about blogs. Blog just entered China, I insist on writing every day. Of course, a week later, I will insist on writing once a week. After another week, I will insist on writing for one months. Because it is too much trouble to write a blog, to write so many articles, I also can not write out. I know that professional journalist editors can write, but they can't keep writing one or one day a week. Later did not know who has changed the blog, only let you write 140 words, this is Weibo. Weibo does not have a core technology revolution, it has made a change, why this thing on fire? I compared with the first Financial secretary of a reporter, he wrote better than me, we write 10,004 of the article, I write but he, but we all write 140 words, in micro-blog curse, who won not necessarily it. You send a lot of micro-blog every day, and finally write a lot of articles, will use text messages, will write Micro Bo. For the reader, we struggle to write an article, that is, the industry's people to see, consumers only look at the title, 140 words, shake a word to know. The user comes up at once, Stickiness also nurturance. It subverts the way you get news, even subversion of traditional media, and even in some ways subversion of certain countries and societies. I'm talking about Twitter. This is simple.

A lot of people are arguing with me about apples. I'm telling you, Steve's return to Apple, the last decade of success is definitely not the core technology success. Do you have a patent for Apple, 3G Technology, 4G technology, cell phone core technology? If you want to evaluate Apple's success, we'll do a very simple experiment. If you have a 3-year-old child or a 70-year-old parent, you give him an Apple device and give him a traditional computer. 3 minutes, which one is easiest to use? I have studied many examples. In fact, finally, why Apple can subvert? Human nature is the most basic thing: like simple, we are the laziest. If you can take me one step further, I would like to use this product. There is another basic thing in human nature: like cheap. Even if we have a lot of money, like Feng as rich, do not buy things to bargain with people? Anyway, I bought pirated CDs, 5 dollars, 6 dollars to talk with people for half a day.

Americans also like cheap, otherwise how does group buying come out of the United States? Let me give you an example, Hewlett-Packard out of a tablet computer, spend a billion of dollars to buy a technology, sell 399 dollars, three years can not sell. Later, HP decided not to do this, to clearance, sell 99 dollars, the result is sold out in a morning. You have to do it cheap, even free, to do things very simple, can impress people, you can win the user beyond the expectations of the experience of the Echo, you can win the user. You win the user, you have laid a solid foundation for your success. On the Internet, disruptive innovation occurs very much, and it happens very quickly. These two things are actually the same as what I said in the micro-innovation article, not necessarily to invent a Coca-Cola recipe, not necessarily to get a great patent. Many times, from the user's point of view, from your side, to observe your users, watch your supply chain, watch your swim up and down, you will find that there are many complex problems have not been simplified, expensive things are not cheap, or even free. There must be a chance of subversion in this area.