Liu Qiangdong Shares Jingdong'S Strategic Plan For Second Twelve Years

According to the world clothing shoes and hats net, recently,

Group CEO Liu Qiangdong met with members of the China Europe Business Camp for the first time and openly shared the Jingdong's strategic plan for the second twelve years. It said that Jingdong will go all the way to technology, vigorously develop artificial intelligence and robotics automation technology, and upgrade the advantages of traditional construction in the past twelve years.

Liu Qiangdong said that in the past twelve years, Jingdong has continuously ploughed in the field of Internet retailing, innovating business models, optimizing organizational efficiency, and has built a business body with the best user experience and the best cost efficiency level in the world.

In the next twelve years, the Jingdong will further open to the outside world, open up the existing supply chain, data and logistics advantages to the public, promote the efficiency of the whole industry and the whole society, and become a provider of infrastructure in China's business and retail sector.

At the same time, Jingdong will adopt AR/VR technology, deep learning, artificial intelligence, robotics automation and other innovative technologies to truly achieve intelligent and unmanned logistics, reduce the operation cost of the industry and society to the limit, upgrade the user experience to the limit, and eventually develop into a leading and truly intelligent business entity.

A year ago, Liu Qiangdong's presentation of Jingdong strategy at the annual meeting was like this: "in the next few years, Jingdong group will focus on three areas to explore.

These three areas are business, finance and technology: the electricity supplier includes Jingdong mall and Jingdong home; finance includes Jingdong finance and the application of Jingdong insurance; technology is mainly cloud technology and intelligence, and these businesses are highly correlated.

We understand that as a Internet Co, Jingdong's practice and strategy should be constantly changing.

But how do we understand and evaluate the strategic choice of Jingdong? This article will introduce two management perspectives to readers.

We may be able to understand Jingdong's future: a technology driven company that provides Internet retailing and services.

Combined with the strategic choice of Jingdong in recent years, there are at least three levels of information: first, Jingdong will expand from standard retail to general retail, because it has been insisting on the expansion of category.

Second, Jingdong will expand from simple retailers to service providers, because it promotes financial and technical services for the supply chain and consumers, and further opens up the advantages of supply chain, data and logistics to the community.

Third, the Jingdong will expand to a comprehensive Internet Co because it needs to do cloud computing, artificial intelligence and intelligent business.

Interpretation 1: the strategic style and industry matching of the Jingdong

In Harvard Business Review, a research article pointed out that if a company's strategic style matches the competitive environment correctly, the company will perform better.

When a company formulates strategy, it usually starts with evaluating the industry in which the enterprise is located, and the choice of strategic style should also start from the competitive environment.

Of course, the actual formulation of the strategy will be influenced by many industry factors. But in fact, the most critical factors are two factors: first, the predictability of the industry; that is, how long the enterprise can predict the market demand, the company's performance, the competition situation and the accuracy of the market prediction? Two, the industry plasticity, that is, how much can the industry or competitors affect the structure and environment of the industry?

If we put these two variables in a matrix, we get four strategic styles -- classical (Classical), adaptive (adaptive), plastic modeling (shaping) and vision (visionary).

To put it simply, the classic strategy is suitable for the foreseeable but weak plastic industry environment, such as the oil industry; adaptive strategy is suitable for unforeseeable and weakly industrial environment, such as fashion monopoly industry; plastic modeling strategy is suitable for unforeseeable but flexible industry environment, such as the Internet industry; vision strategy is suitable for predictable and flexible industry environment, such as smart phone industry.

From the above strategic matrix, we can explore the current and future business of Jingdong and the corresponding industry environment:

The first category: standard retail (predictable, unplastic classical) turn to general retail (unforeseeable, unmalleable, adaptive).

1. Jingdong started with home appliances and 3C products, and is still its core business. Due to its standardization, the industry is predictable but not very plastic.

2. after Jingdong expanded the category, non-standard categories increased, while the characteristics of general retail industry were unpredictable and unbecoming.

The second category: retailers turning to service providers, increasing business types, Jingdong Finance (foreseeable, unmoulded, classic), Jingdong Technology (foreseeable, plastic, visionary).

1. Jingdong finance is now providing supply chain finance and consumer finance services, which is predictable but not plastic.

2. Jingdong technology is currently supporting the company's business and belongs to the standard technology category. The industry is characterized by foresight and plasticity.

The third category: turning to Internet Co (unpredictable, plastic and plastic).

If Jingdong wants to further provide general technology and become a veritable Internet Co, then the industry environment it faces is unforeseeable and highly plastic.

In view of this, the strategic choice of Jingdong is becoming diversified, and the business environment faced by various businesses is also more complicated.

Obviously, Jingdong can no longer be successful with a certain type of strategy, just like the previous standard retail period.

What it must do is to choose the strategic style that matches it for different strategic objectives and business expansion, and formulate strategies accordingly.

Of course, from Liu Qiangdong's recent speech, we believe that the key direction of Jingdong's efforts may be the latter two categories.

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Interpretation 2: Jingdong's strategic positioning and trade-offs

According to Professor Michael Porter of Harvard Business School (MichaelE.Porter), the strategic positioning is to prevent companies from using operational benefits instead of real strategies.

The real strategy is to achieve lasting competitiveness by maintaining the unique advantages of an enterprise.

This often means that the enterprise has taken different operational activities with competitors or completed similar activities in different ways.

The strategic positioning of an enterprise includes product type, customer demand and contact way (they are not mutually exclusive, but often intersect). The three major sources are:

1. strategic positioning can be based on the provision of a branch of certain products or services in the industry.

This category is called variety-basedpositioning, which is based on the choice of product or service diversity rather than the strategic positioning based on customer segmentation.

When a company can provide the best products and services through a series of unique operation activities, the location based on products can create economic value.

For example, Jingdong only sold electronics at the early stage of its creation.

Only services related to electronic products are provided.

2. strategic positioning can also be based on a particular group of customers to meet their overwhelming majority or even all of their needs.

Such positioning is called "needs-basedpositioning".

If there are many different needs of a customer base, and a set of customized business activities provided by a company can best meet these needs, the company can adopt this positioning method.

For example, Jingdong's early and even current customers are basically online users, whose main products and services are based on the needs of online users.

3. strategic positioning can also be based on the way of contacting customers to subdivide customers.

Although the needs of these customers are similar to those of other customers, the best arrangements for operational activities are different when providing services to this group of customers.

Such positioning is called "access-basedpositioning based on contact path".

The way of contact depends on the user's regionality or business scale, or it can also depend on other factors, which requires a unique approach to best contact with customers.

For example, the development of Jingdong over the past decade has been based on the urban area.

Jingdong's 1 store, which was acquired in 2016, has great advantages in serving customers in East China.

Finally, Jingdong's newly established new channel business department also hopes to provide targeted products and services based on the characteristics and scale of the township.

With the classification of these positioning, we can see that with the expansion of the whole category and the introduction of more non-standard products, the positioning of Jingdong based strategy is weakening. Jingdong's expansion of the financial, O2O, technology and other business areas shows that the positioning of demand based on Jingdong strategy is being strengthened; Jingdong's acquisition of shop No. 1, the purchase of Yonghui supermarket (fresh needs of a unique approach to reach customers), and the establishment of a new channel business unit, etc., can be found that the positioning strategy based on contact approach is becoming more diversified.

However, according to Michael Porter's theory, the sustainable strategic orientation of an enterprise is to make trade-offs.

Therefore, the new strategic positioning of Jingdong must answer this question.

Generally speaking, the reasons for making trade-offs include the following aspects:

First, the conflict between image and reputation.

When a company is widely known for providing a certain value, if it has to offer another value, or try to provide two conflicting values at the same time, it will lose its trust in its customers or confuse the customers.

For example, if Jingdong wants to win the reputation of standard and proprietary business, if it wants to provide the same value in non-standard products and platform businesses, it will impact and weaken the image already established.

Therefore, Jingdong may need to integrate the existing value and new value, and further expand its image.

Second, choose the operation activities from the enterprise itself.

Different positioning (and meticulous)

Various activities require different product configurations, different equipment, different employee behaviors, different skills and different management systems.

Many trade-offs reflect the changeability between devices, personnel and systems caused by location.

For example, Jingdong has always been a city dominated battlefield, thus forming the best operation system.

When Jingdong wants to enter the township and rural markets, its operational activities need to be re established, and some of the previous advantages may be useless.

Therefore, Jingdong has made many new attempts in rural electric business.

Third, trade-offs also come from restrictions on internal collaboration and control.

When an enterprise chooses to compete in one way rather than another, it defines the priorities of all matters of the organization.

On the contrary, those who try to do everything to satisfy all customers will make their employees lack a clear decision-making framework in their daily work, which may lead to confusion.

For example, Jingdong has always appeared as a retailer. If Jingdong wants to expand its business into the field of service providers or technology providers, it may have to reorganize the resources, processes and values of the enterprises to avoid confusion.

Of course, Jingdong's choice of business units and independent operations may be a solution.

Finally, among all the factors affecting strategy, the strong desire for growth is perhaps the most intractable.

Trade-offs and restrictions seem to limit growth.

For example, to exclude other customers by serving only one group of customers will indeed restrict the growth of revenue in tangible or intangible ways. Aiming at many customer groups and emphasizing the strategy of low price competition, customers who value product performance and service will go away, and if the differentiation strategy is implemented, they will lose the price sensitive users.

The Jingdong is still in the process of pursuing growth. If the strategy makes compromise choices and lacks consistency before and after, it may erode the original competitive advantage of the company in products and target customers.

At the same time, if Jingdong wants to compete in a variety of ways, it may create chaos within the enterprise and damage the enthusiasm and concentration of the organization, so Jingdong should also pay attention to these new challenges.

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