Reporter | Jiang Yue
Pinduoduo employees and the incident of jumping off the building once again aroused the public’s heated discussion about 996. Ali, Meituan, Didi and other companies aggressively marched Community group buying has been criticized by the People’s Daily… Internet companies that used to show their talents during the epidemic have repeatedly been questioned.
If the purpose of an enterprise is to create customers, it seems that overworked, expanded business scope, and called for system reform to support innovation are all in order to better serve customers.
In this regard, Fudan University School of Management Professor Lu Xianghua of the Department of Information Management and Information Systems in the New Year of 2021 Fudan University School of Management The forum”No Technology Innovation, No Future” stated that the achievements of Chinese Internet companies in the past 20 years have made practitioners believe in the ability of technology to change the world, but they have ignored people’s acceptance of emerging things. Technological capabilities have increased exponentially, while human cognition has risen linearly. The rapid increase in efficiency and the slow change of human cognition have made the conflict between the two increasingly greater.
This kind of neglect comes from the company’s excessive emphasis on growth to meet capital needs. After all, the basic goal of every company is to pursue maximum profit. Managers can also use Peter Drucker’s “economic performance is the most important principle to determine the nature of an enterprise” to defend themselves .
“Growth at all costs” has become a matter of course, and the old model should be replaced by the new model. As a result, there were takeaway riders trapped in the system, and fresh food vendors who were eliminated by community group buying, and were forced to accept that”996 is a blessing””You, me and him.
However, the second half of Peter Drucker’s sentence was forgotten:”Enterprises are created and managed by people, not economic forces.”
Lu Xianghua also pointed out that facts In the process of dynamic development, it is difficult for companies to continue to grow in an ideal state. When the efficiency reaches a certain level, some obstacles will appear, which will delay its development. She suggested that the Internet industry should lower its expectations for growth to reduce the speed of change. On the one hand, this will enable the society to better follow up, and on the other hand, companies can gain momentum and prepare for the next round of growth.
The following content is selected from the lecture of Professor Lu Xianghua, organized and edited by UI Business School:
Aside from all kinds of packaging on the Internet, Internet technology itself has only two capabilities. The first is the network multiplier effect, that is, the more nodes connected to the network, the greater the value of the platform, which leads to a winner-take-all; the other is the diminishing marginal cost of information product replication and dissemination, which refers to platform collection and processing The cost of information is getting lower and lower, but the value of information superposition is getting bigger and bigger.
For example, Popular Comments initially simply aggregated consumer reviews on food and beverages, but as the information becomes With more and more, its understanding of the catering industry has become more and more thorough, and slowly, it has become a knowledge integrator in the catering industry. Once an enterprise becomes a knowledge integrator in the industry, its processing capabilities, matching capabilities, and resource allocation capabilities for related information will be stronger. For example, restaurants will ask Dianping for promotion, ranking, and design of side dishes. Over time, Dianping has changed from an initial network information aggregator to an important integrator of the value chain.
The network multiplier effect and the information superimposition effect have made Internet companies more and more powerful in the industry. Many companies initially only provided very basic connectivity and information services, but they used the power of capital to quickly trigger network effects and achieve network multiplication, and then formed industrial knowledge based on accumulated data and users, and began to provide users with other industrial knowledge based on these industrial knowledge Value-added services to establish sufficient influence in the industry. Later, by attracting more capital to join, it can quickly cross-border cooperation, expand business areas, penetrate deeply into the entire industry, and achieve winner-take-all.
Using the technological capabilities precipitated by network effects and information superposition, Internet companies have shown great initiative in the scientific and technological fight against the epidemic in the first half of 2020. Through the accumulated data and tools, they quickly launched various epidemic prevention and control tools and production and life services in special periods. For example, government services such as personal health declaration, patient peer inquiry, market supervision and reporting, contactless personal services such as online courses, cloud conferences, remote office, remote consultation, and public life services such as new retail and takeaway platforms.
There is no doubt about the huge technological capabilities behind the Internet industry. However, when they tirelessly use technology to improve the efficiency of traditional industries, they have not made an effective assessment of social acceptance and supporting capabilities. With the help of the capital market, Internet companies can change the old model in about two to three months, but for society, it takes longer to accept changes. For example, teacher Li Feifei pointed out in an article published in”Science” that the application of intelligent medical environment can be effectively used two or three years ago. The effect of medical treatment has been changed. However, so far, hospitals, patients, and even doctors have not been”cold” with these applications.
Current Internet companies place too much emphasis on growth to meet the needs of capital. They value how to quickly seize the market and conquer the city, but ignore or downplay the society’s ability to accept new models and the speed of adaptation.
In the face of the powerful technological invaders of the Internet, society has shown three aspects of unsuitability.
First of all, people can’t keep up, especially employees at the executive level. The reason why the article”Takeaway Rider Stuck in the System” aroused a wave of waves is because everyone resonated with it. The company’s algorithm considers the interests of businesses, consumers, investors and platforms, as well as the economic interests of employees, but the happiness and safety of employees has been ignored. Most of them use efficiency in the name, and transfer the pressure to employees, especially those at the executive level.
On the one hand, the efficiency advantage of Internet companies is based on its technical foundation, and on the other hand, it also depends on the implementation and execution of employees. Therefore, companies usually use a unique set of organizational management and cultural systems to increase employee input and encourage them to innovate. Appropriate incentives can indeed increase work commitment and innovation, but in the Internet industry, this effect is currently approaching a limit point. In the long run, it may be counterproductive and an inverted U-shaped relationship appears.
Secondly, competitors can’t keep up. The network effect and information superimposition effect of the Internet, under the blessing of capital, enables enterprises to grow and expand rapidly, which causes incumbent competitors to adjust and are forced to withdraw from the market. In the community group buying incident, why everyone would attack Internet companies as a group, because they want to change the target is not banks, logistics, automobile manufacturing and other capable competitors, but those millions of potential competitors Practitioners in the fresh food industry. Compared with the traditional small vendor model, through the advantages of data and network resource allocation, Internet technology can bring about the improvement of the human efficiency and the efficiency of the fresh food supply chain, which has produced a strong substitution effect on the old model. However, this replacement is different from the past. It directly replaces the work of a large number of low-level vegetable vendors, which involves the most basic issues of people’s livelihood and social justice.
From a longer timeline, the model iteration brought by technology is indeed inevitable. The replacement of the old model by the new model also symbolizes the progress of society. Vegetable vendors may still be eliminated in the end, but we hope that this process will be gentle and gradual. It is the joint efforts of society, government, individuals and large responsible enterprises to allow incumbent competitors time to respond and adjust. Instead of directly using the power of capital and technology to get them out of the market. At any time, society cannot abandon most people in pursuit of the so-called disruptive innovation in technology. After all, the development of productivity should serve the survival of people.
Third, governance and supervision can’t keep up. Out of support and encouragement for new business formats, my country has generally maintained an inclusive and prudent attitude towards the development of the Internet industry. In addition, China is at the forefront of the world in the areas of food delivery, e-commerce, mobile payment, and sharing economy, so that there is no mature experience in risk supervision and governance policies to learn from. But now, the fast-developing Internet industry has a large volume and a strong market dominance, and the regulatory governance system has reached the time when it has to be introduced.
In fact, the world’s major economies are facing the problem of lagging supervision, and they are also taking actions one after another. In 2018, the European Union passed the”General Data Protection Regulation; on December 15, 2020, the European Union promulgated the”Digital Services Law” and Draft Digital Market Act; In October 2020, after a 16-month investigation, the US House of Representatives released a 449-page technology antitrust investigation report. The report believes that Internet companies currently have too much power and must Restrict them and make them subject to appropriate supervision. The report also suggests that regulatory authorities should split similar businesses of Internet companies, or require the interoperability of products and services across the market, so that data can be migrated.
In China, we also acted quickly. For example, The State Administration for Market Regulation drafted and issued antitrust guidelines on the platform economy on November 10, 2020; December 11 The Politburo of the CPC Central Committee held a meeting to clarify and emphasize anti-monopoly and prevention of disorderly expansion of capital; On December 14, the State Administration for Market Regulation filed three cases of undeclared illegal implementation of the concentration of undertakings and imposed a fine of 500,000. .
The problem of community group buying is also slowly being resolved:the “Nine Prohibitions of Community Group Buying” rule released on December 22 makes the competition between new entrants and incumbents become More fair. Therefore, to change the Internet companies’ excessive pursuit of efficiency-oriented system rules, reasonable external supervision has played a very key role, and it can effectively avoid short-term market out-of-control.
2020 is a magical year for the Internet industry. What kind of changes should Internet practitioners make, and how should they embrace the development after regulatory normalization?
The famous economist Karl Polanyi mentioned in”The Great Transformation:The Political and Economic Origins of Our Time” that the speed of change is no less important than the direction of change itself. Although the latter is usually not determined by our subjective wishes, the speed of change we can tolerate is allowed to be determined by ourselves.
Therefore, I suggest that the Internet industry lower their expectations for growth to reduce the speed of change. In the dynamic development process of the enterprise, it is extremely difficult for the enterprise to continue to grow according to the ideal state. When the efficiency is high to a certain degree, some hindering factors will appear. In fact, companies also need some factors to temporarily reduce efficiency. On the one hand, society can better follow up, and on the other hand, companies can also gain momentum and enter the next round of growth. If we look back at the historical process of industrialization, we will find that there have been labor movement, consumer movement, product quality movement and environmental protection movement. These movements have reduced the speed of the process of industrialization to a certain extent, which is the manifestation of society’s spontaneous correction of the problem of”capital being too profit-seeking”.
In addition, legislation and supervision in related fields have also played a long-term purpose of protecting the fruits of industrialization. Instead of entangled with the intentions of the regulatory authorities, why should Internet companies introduce anti-monopoly measures at this moment, it is better to look at regulation rationally. The purpose of supervision is not to suppress, but to shape a more effective market economy. This is a normal error correction phenomenon in the process of technological innovation and social symbiosis, and it is also an important part of social progress.
Secondly, Internet companies should also get rid of the efficiency-oriented thinking and pay more attention to social responsibility. Pixar CEO Edwin Catham once said that we went too fast and too eagerly, and forgot the original direction. The beasts will perform for performance, process for process, and forget the overall goal for sub-goals.
I believe that the original intention of many Internet companies was to use the power of technology to benefit mankind and create value for society. However, they went too fast and too eagerly, forgetting the original direction; employees also under the pressure of performance, for efficiency and efficiency, forget the original intention of the company. In the digital age, in addition to pursuing efficiency first, Internet companies must also form their own digital wisdom; technology must not only go to heaven, but also be able to do things that are valuable to society.