Xiaomi 's high-end strategy
After the Spring Festival in 2022, the first important meeting of Xiaomi Group was a discussion meeting on group strategy. At this meeting, Xiaomi officially made it clear that the high-end road is the only way for Xiaomi to grow and is also the life-and-death battle for Xiaomi's development. Xiaomi will unswervingly implement its high-end strategy. At the same time, Xiaomi has clarified its strategic goal of high-end: , Xiaomi mobile and experience should fully benchmark iPhones, and win the first place in the market share of domestic high-end mobile phones within three years.
For Xiaomi, this is not only a major decision in the business direction, but also an important ideological liberation of the business model in terms of understanding and execution. Understanding high-end and realizing high-end is a major breakthrough development of Xiaomi's methodology and Xiaomi model in practice.
The significance of high-end
In fact, when Xiaomi mobile phones were born, they were high-end products of domestic brands, whether in terms of pricing, performance or experience. Xiaomi’s current attempt to return to high-end began in 2020, and the decision-making motivation at that time came from a vague value orientation and a realistic pressure.
's fuzzy value orientation means that as our users' requirements for product experience become higher and higher, the original performance that is focused on enthusiasts can no longer fully meet the increasing experience requirements of our growing user group. On the one hand, our team is based on user voices and on the other hand, based on competitive strategies, and vaguely senses that it is necessary for us to provide users with more comprehensive and more expensive products.
. The real pressure is that with the advent of the popularization of 5G, the cost threshold of flagship phones has also increased. At the beginning of 2020, the price of an industry-leading flagship phone must reach the 4,000 yuan threshold. We estimate that 2 million units of mobile phones worth 4,000 yuan can be sold to match the cost. This conclusion has caused the entire team to fall into great anxiety, and even caused serious swings and blind testing in their strategies.
Later I told the team that we should start from the basic platform users and make a flagship product that satisfies them. If tens of millions of core loyal users pay the bill, 2 million units will definitely be achieved. Based on this concept, we polished the performance and experience in a targeted manner. Later, the success of the Xiaomi 10 series flagship phones far exceeded our imagination, and sold about 7 million units.
So far, Xiaomi has been on the high-end road for two years, with success and setbacks. In this exploration process, we have experienced a series of doubts and swaying. When "crossing the river by feeling the stones", it is a difficult process to form a consensus on what is high-end and how to do high-end.
"Can you be high-end when you insist on cost-effectiveness?" This is the most common question. In the usual perception, high end means double highs, i.e. high prices and high premiums. There is a deep-rooted understanding in the industry that building a brand and high-end is for premium, and premium ability is the fundamental purpose and only standard for high-end. When a colleague asked me this question, my answer was that in our discussion, we did not insist on whether we could be high-end, but we could only do it while insisting on cost-effectiveness and how to be high-end.
First of all, we need to clarify several basic cognitions: there is no split brand high-end and product high-end. Brand, product, and user are the mapping of a unified strategy at different levels, which is integrated in itself; high prices are one of the necessary perceptual cognitions of high-end
, which is the result rather than a means; high-end is the overall strategy of the group brand, and it is impossible to achieve only
in a single category.
Based on this understanding, we can further introduce the basic principles of high-endization under the Xiaomi model: high-endization is an important manifestation of user value. We do not agree with high premiums, but we must agree with user value. High-endization is a business guidance standard, and we use perfect user experience as the final delivery and verification standard.
From this, we can summarize the three core elements, three support requirements and three key indicators of high-end methodology.
first of all, there are three core elements, namely:
brand: we need a complete and unified brand system and a value-driven image.
user: We must win the recognition and use of high-end circles and maintain a consistent user image.
Products: technology-leading, experience-first, unique design.
At the same time, we also need to supplement three supporting factors: first, price, price is the most obvious high-end attribute, we must have a leading position in the high-priced product range, and at the same time, we also need to maintain stable price performance and continuous increment; second, channels, we must continue to promote the top location selection of channels and a good shopping experience; third, services, we must continue to improve the professionalism of services, so that our users can feel higher professionalism and greater value gains in all service contacts.
According to these methods, we can set three key indicators for high-end:
Sales indicator: market share in the high-end price segment.
mental indicators: user mentions, perceptions and preferences about us.
experience indicator: quality satisfaction represented by net recommendation value and favorable review rate of public platforms.
I think the core of high-end value lies in experience, and Xiaomi’s high-end guidance should be from performance-leading to experience-first.
The unavoidable battle of life and death
Why does Xiaomi have to be high-end? Are there any choices that don’t make high-end? Someone has asked this question within Xiaomi. The answer is, we have no choice.
The past practice of the consumer electronics industry has proved that although the capacity of the high-end market itself is not large compared to the market market , high-end success will provide the entire brand with a strong siphon effect, which will greatly attract the needs of other brand users to replace the phone. In other words, in the current Android mobile phone market, whoever has a significant advantage in the range of more than 6,000 yuan will have the opportunity to quickly form a huge overall advantage in overall share. Without the advantages of high-end, no matter how large the mid-range and entry-level market share is, it will be lost sooner or later.
The ultimate advantage of the technology industry needs to be reflected in technology and the experience supported by technology, and high-end products are a concentrated reflection of the company's systematic capabilities. If the performance of the high-end market cannot continue to force the improvement of capabilities, then in the long run, the company will inevitably go to mediocrity or even decline. Therefore, high-end is a life-and-death battle that Xiaomi cannot avoid.
The current users and users 10 years ago have undergone earth-shaking changes. The Xiaomi team's understanding of user needs, the results delivered to users, and the way of communicating with users will inevitably undergo changes. For Xiaomi, high-endization is not a business tactical issue, but a collection of major changes facing the future, a test of Xiaomi's comprehensive capabilities and strategic determination in the next 10 years.
Any company will more or less fall into part of its path dependence after 10 years of development. It's hard to say whether this is a kind of laziness, because we see these companies still keep working hard to polish the old system, old methods, old technologies. However, these old methods and old routines often cannot solve the problems of the new era. This requires the management team to have the courage to face problems and break old rules, think about what must be adhered to, what must be reformed, and the patience and determination to reform step by step.
This life-and-death battle has just begun, and many details will not be unfolded here. High-end is an inevitable key proposition for the Xiaomi model and Xiaomi methodological system: If a development model is only applicable to some people and some markets, it is difficult to say that it can continue to be established. Therefore, the Xiaomi team must liberate their minds and seek truth from facts. Through high-end training, further improve and improve Xiaomi's methodology and efficiency model, and win the verification and recognition of a wider market and population.
input, continue to invest, and form enough pressure, so that the advantages of the model can be truly transformed into a long-term and stable victory that will continue to strengthen.
Second, accept calmly: Growth means we must face challenges.
When we chose the channel in 2015 and took a huge detour in the channel in 2018, we all experienced a very painful process.At the beginning of 2020, when we encountered US sanctions and faced industry opportunities, we had to make a major decision on whether to build a car in a short period of time. The background of the launch of the high-end strategy is also that we must face the new trend of industry competition and changes in user needs, and we must step out of our comfort zone.
All of this is something we must experience, and the more we are in pain, the more we must persevere. This is a challenge we must face, and the most painful time is often when we are closest to discovering the essence of the problem or finding a key breakthrough.
Third, avoid dogmatism and rash conclusions.
Xiaomi model was established based on the specific exploration of Internet thinking in the fields of hardware, Internet and new retail. When facing a new stage of development, we need to solve the new problems we encounter in a realistic manner, rather than just obsessing with dogmatism , one-sided, static and mechanical way of understanding Internet thinking and Internet methodology as only doing e-commerce and excluding all classic retail scenarios and experiences; not one-sided, static and mechanical way of understanding cost-effective strategies as only making products at medium and low prices, and only making products with outstanding parameters and obvious performance, but we must comprehensively, dynamically and develop new growth areas and develop new operating models. We must always grasp the fundamental center of "let everyone in the world enjoy the better life brought by technology", and grasp the two basic points of "providing leading user experience" and "always approaching the limit efficiency". At the same time, in the exploration and development of new models, we must conduct more research, think more, and verify more, and not draw conclusions, but use scale practice to guide our long-term work.
Fourth, we go wherever the user is.
Xiaomi’s vision is to “persist in making friends with users and be the coolest company in the hearts of users.” To truly realize this vision, we have to do a vast amount of work, but the most important thing is to try to get closer to users and continuously meet users' needs for continuous improvement and enrichment. This is true for new media, new retail, and high-end strategies.
Xiaomi is still in and will be in the initial accumulation stage for a long time
Xiaomi's first five years of startup have achieved unimaginable leap success. After that, I encountered troughs, setbacks, and then returned to rapid growth, and encountered several difficulties. After listing, it has also experienced ups and downs in the capital market. Xiaomi encountered two questions at the beginning of the new 10 years: one is whether Xiaomi methodology is only useful in the industry, and the other is whether Xiaomi methodology can only be used by small companies in the initial stage. The two problems of
are essentially the same problem, that is, can Xiaomi methodology really be effective in the long run?
I think it is effective for a long time. Because its constituent elements have been verified in companies in different industries and stages. Xiaomi has overcome difficulties, which has proved its resilience and reliability.
The problem we are facing today is actually how Xiaomi, as a technology company, solves growth anxiety. The first is at the cognitive level. As mentioned above, in the new era and new situation, Xiaomi needs to "emancipate the mind and seek truth from facts", constantly enrich and develop Xiaomi's methodology, and find new strategies that adapt to the current environment; the second is that at the capability level, Xiaomi's own capabilities still have serious shortcomings and need to be quickly and continuously strengthened to support the systematic capabilities of a company with a revenue of hundreds of billions of yuan.
Xiaomi began to explore and make up for the lessons in 2016. For example, in 2016, Xiaomi's mobile phone R&D team had less than 300 people, and today it has reached a scale of more than 10,000 people. I repeatedly remind my colleagues that we should move quickly, our mentality should be slow, our tactics should be improved slowly, and our strategic accumulation should not be fast. If you are too anxious, your actions will easily deform. We must ensure that every step you are making steady progress. This is the most important thing.
We found that many world's top technology companies, such as Apple , Samsung , Sony , have experienced more than 30 years of accumulation before they truly win a solid position as a leader in the industry.30 years is the time required for generations of engineers to continue and build a deep leading technology system; it is the time required to grow to a sufficient scale, catch up with and surpass related industry giants. On the other hand, a technology company can experience several ups and downs within 30 years before it can lay a solid industrial foundation, form a deep influence and leadership on the industrial chain, and form a stable and solid corporate culture and business philosophy. In addition, the growth of a company, along with the maturity and improvement of a set of methodology and a model, needs to go through the test of the industry and macro cycles.
We must look at our own development stage objectively. Xiaomi has only been in charge of 12 years and is also a technology company that is continuing to accumulate initially in the
line, and will be in the initial accumulation stage for a long time. Accumulation is long-term, especially the Xiaomi model guided by Xiaomi's methodology. Due to the adherence to the cost-effective strategy, we cannot accelerate original accumulation through high gross profits, so it is destined to not be smooth sailing and achieved overnight. The difficulty of
is that Xiaomi's methodology is equivalent to choosing a difficult model, because it actively abandons high gross profit, which forces Xiaomi to accumulate as soon as possible by pursuing high efficiency, including a higher-level and capable R&D team, more accurate and flexible business strategies, shorter transaction chains, more accurate user arrivals, etc.
These were easier to achieve through tightly connected and capable small teams during Xiaomi’s early days. The talent density is high enough, the company reaches consensus quickly enough, the communication and cooperation are close enough, the methodology is advanced enough, and it is relatively easy to achieve efficiently and efficiently. When the company's scale increases, business expansion, team expansion and competition intensifies, the difficulty of realization increases exponentially. One problem we must face is the systematization of organizational management and processes. Since its launch in 2018, Xiaomi has been conducting targeted tutoring. We realize that if a Fortune 500 company does not have a complete system and process, it will lead to chaos in their own battles, which will lead to inefficient internal friction and huge waste, and will inevitably fail to achieve high efficiency.
system is established to more effectively unify thoughts, strategic goals and paths, accumulate capabilities, and accelerate and improve orderly accumulation. Only with a system can the company form a "base", which are systematic technological accumulation, systematic user growth, systematic organizational management, systematic channel operation, etc. Otherwise, they will be "bandits". They will be able to fight wherever they go. There is no organization, no direction, no precipitation, and no accumulation. Such a strategy of play is destined to have no future. We must firmly oppose and avoid such "business bandit thinking" and "business bandit habits".
But systemization is not a panacea. It can help make fewer explicit mistakes, but it cannot guarantee innovation and vitality. The operation of any mechanism is inevitably detrimental, and there is always the risk of bureaucracy and rigidity. For a larger-scale company that pursues efficiency, it requires not only large-scale combat capabilities, but also extremely flexible group tactical literacy. This is also the most important problem that Xiaomi needs to solve at present: we must be vigilant in the process of learning systemization. We must not learn systematization and have not yet learned it, so we will lose our sense of responsibility and flexibility in entrepreneurship first.
So, how to balance the systemization of large companies with the destructive and flexible nature of startups?
I think this requires us to establish model confidence and cultural confidence, and to guide our work with the continuous deepening of understanding of core elements in the process of improving methodology and model
, and to guide our value judgments and behaviors with the cultural core, and to realize the consensus and alignment of values, methodology and business strategies and tactical actions at all levels. Every small team can maintain the entrepreneur's enthusiasm, resoluteness, flexibility and a strong sense of responsibility and mission. In this way, the whole company can continue to work hard and invest continuously in key goals to reach consensus, maintain pressure, and focus on key issues.
However, continuous investment and continuous efforts may not necessarily lead to long-term and continuous efficient and effective accumulation. Focusing on achieving goals at each tactical point, fighting around with hammers and sticks, or "bears breaking sticks", is completely different for the overall strategy.Whether it is technology research and development, product definition, user operation, brand building and channel construction, the key lies in having a clear, clear and specific strategic direction, a global system perspective, and a broad and clear consensus on the goals and paths from strategic point A to point B, and dismantling accurate road signs, so as to ensure that every step of investment can be transformed into sustainable accumulation.
Go back to the question at the beginning of this section. I firmly believe that Xiaomi methodology and Xiaomi model are advanced enough and can be applied and maintained for a long time. As a young company, especially a company that is determined to take the initiative to give up on chasing high gross profits to speed up accumulation speed, after growing beyond the conventional market, on a stage that exceeded the previous expected scale, facing top competitors who are far beyond their own accumulation level, Xiaomi’s team and I have no experience. We must cross the river by feeling different stones at different stages. Over the past 12 years, my colleagues and I have firmly adhered to Xiaomi’s value core, core methods and fundamental pursuits, and we are still constantly exploring and enriching the answers to the future, which requires great patience and lasting resilience.
This is not only a challenge for continuous entrepreneurship, but also a charm for continuous entrepreneurship. Entrepreneurship is to constantly find balance between order and chaos, between certainty and uncertainty, and find the optimal solution for each node. From the perspective of spiritual roots, the Xiaomi model that Xiaomi and Xiaomi trust is a long-term entrepreneurial culture. I believe that Xiaomi and the methodology and model it summarizes and believes in will surely win a sustainable and efficient and bright future.
OK, that’s all for sharing! Always believe that good things are about to happen, and look forward to Xiaomi 20 years later and us 20 years later! Thank you for your careful reading, thank you!
