Do you understand this trend in 2023?

Content source : This article is compiled from the Internet.

Rotating Editor-in-Chief  |  Editor-in-Chief | Qingyang Runjin   Duty Editor  | Runjin

The 7205th  in- depth article: 7316 words | 19 minutes to read 

way of thinking

Note Jun invites you to think before reading:

What does “cost reduction and efficiency increase” that has been discussed in full swing mean?

How can enterprises “reduce costs and increase efficiency”?

1. What is cost reduction and efficiency increase?

1. Only by creating value for customers can we truly reduce costs and increase efficiency.

—— Noteman

2. We will eventually usher in a stage of explosive growth of data. With the support of unlimited computing power and storage capacity of cloud computing, and the integration of correct tools, advanced algorithms and organizational processes, data is being transformed into new productivity. External forces are driving digital transformation.

Internally, the significance of digital transformation is to reduce costs and increase efficiency. Externally, the goal of digitalization is to seek business model breakthroughs and find the next growth point.

——Yang Jiongwei, Founder and CEO of Wellington Technology

3. Cost reduction requires excellent operation, step by step to understand every stage corresponding to each business process, understand all the upstream and downstream supply chains of popular models, and then improve efficiency.

There is no need to change the past business model, but to improve it. Efficiency can be achieved through partial optimization of the original business, but the effect is limited.

Greater efficiency lies in developing new business models and opening up its own second growth curve—innovation. Innovation depends on the upgrading of business models, and its essence lies in finding new development paths.

——Zhao Dexu, former vice president of Wison Group

4. Predicament is the only opportunity for enterprises to reduce costs. Because when the economy is on the rise, it is difficult for companies to have opportunities to reduce costs. Employees must become more and more expensive, and raw materials and office rental costs are all rising.

——Zhang Lijun, Founder of Entrepreneurial Yeast

5. In the world of business management, there is an axiom that “increasing efficiency will inevitably reduce costs, and reducing costs will not necessarily increase efficiency.”

——Liu Weiguang, Vice President of Alibaba Group

6. What is cost reduction and efficiency increase? That is, in the company, actions to increase revenue should be done more, and actions that are ineffective should be done less, or even not done. What is effective? Going back to the company’s business objectives, enterprise management is management by objectives.

First, there are eight goals in Drucker’s goal management, which includes the current company’s commonly used goal management tool okr, and the goal is the O in OKR. Second, back to the organization, whether the goals can be achieved efficiently, whether there is cohesion, and whether resources can be used effectively.

If everyone goes to the goal, it must be relatively efficient.

——Wen Long, co-founder of Noteman

7. For small and medium-sized enterprises, it is particularly urgent to promote the digitalization process. In the post-epidemic era, economic growth has slowed down, and the cost pressure of small and medium-sized enterprises has increased. At the same time, due to the influence of various uncertain factors, the efficiency of daily operation is reduced. The need to reduce costs and increase efficiency through digital transformation is imminent.

According to IDC’s “Chinese Enterprise Digitalization Process and Future Office Insights”, 77% of enterprises are in the incubation period of digital transformation, and 23% have entered the stage of digital transformation.

– Yidian Finance

8. Peter Drucker once said: “Efficiency is more important than efficiency, and what is truly indispensable to an enterprise is efficiency, not efficiency.”

The so-called “efficiency enhancement” has two connotations, one is “increasing efficiency” and the other is “increasing effectiveness”, among which: efficiency means “doing things in the right way”, while efficiency means “doing the right thing”. Efficiency pursues time saving and path optimization. The management of start-up companies should first think about how to focus on key “efficiency factors” such as “increasing efficiency”, how to optimize time cost, and how to reduce trial and error costs.

——Liu Weiguang, Vice President of Alibaba Group

9. Nowadays, it is an era from inefficiency to high efficiency, and every enterprise must do refined management. Behind the refined management of enterprises is to reduce costs and increase efficiency. In difficult times, every enterprise must do a good job in reducing costs and increasing efficiency.

——Zhang Lijun, Founder of Entrepreneurial Yeast

10. The core of reducing costs and increasing efficiency is actually increasing efficiency, that is, improving human efficiency.

Cost cutting can only solve the problem of funds, but cannot solve the problem of organization, and may even bring about some negative effects. The improvement of personnel efficiency, by improving the ability of a group of people, promotes the growth of revenue and forms a positive virtuous circle, which is more conducive to the long-term development of the company.

——Zhang Lijun, Founder of Entrepreneurial Yeast

2. Why reduce costs and increase efficiency?

1. The transformation and upgrading in 2023 will still be the themes of “cost reduction and efficiency increase”, “survival” and “stock game”. In 2023, it will inevitably be an ecological environment in which the survival of the fittest continues. Any entrepreneur, entrepreneur, and manager must be vigilant in a timely manner, and any team must have a proper attitude and action. The strategy, path, and implementation of cost reduction and efficiency enhancement must be clear and effective, and this bottom line is joint operation Customers, practical and efficient. Otherwise, Waterloo is still ahead, and you will only get less in the market, not more.

——Ke Zhou, Founder & CEO of Noteman

2. From the point of view of the entire export, consumption and investment, the global economy has fallen into a downward phase, the whole system is unstable, and the overall situation is not optimistic. Enterprises enter the stock market from the incremental market. This change directly leads to companies paying more attention to operating quality in 2023, that is, cash flow and profits. Companies enter a downsizing period and begin to reduce costs and increase efficiency.

——Jiang Hongfeng, Founder of Youlian Academy

3. In fact, in the past two years, Tencent itself has also used digital technology to reduce costs, increase efficiency, and transform and upgrade. After three years of hard work, we have moved all of Tencent’s own businesses to run on Tencent Cloud. Through more flexible resource scheduling and more agile response to changes in supply and demand, IT costs alone can save the company 3 billion yuan per year.

—— Tang Daosheng, CEO of Tencent Cloud and Smart Industry Business Group

4. From 100 million to 1 billion, enterprises have entered a new stage of development. Many enterprises will go public at this stage, and even move towards a better stage of development.

Management is the most important ability at this stage, including planning, organizing, leading and controlling. The essence of management is to reduce costs and increase efficiency. It is necessary to pursue both efficiency and effect.

In addition to improving management capabilities, it is also necessary to be good at connecting with the capital side, and sort out the path of corporate growth through the connection with the capital side, especially the path to listing on the capital market.

——Ye Feng, a columnist for financial media such as Peking University Business Review

5. Organizational slimming, business adjustment, and cost reduction and efficiency enhancement all reflect the company’s sense of urgency. Returning to Ren Zhengfei’s internal letter: We can invest in key strategic opportunities and existential crises at any cost, but we can’t spend money randomly on non-strategic opportunities.

To get to the bottom of it, companies may use external pressure to squeeze out past bubbles and lay out new business growth points.

——Tiger Sniff

6. The “cost reduction and efficiency increase” of major manufacturers is essentially to reduce unnecessary expenditures and strengthen the operating efficiency of the main business.

The reason is not difficult to understand. The main business is the backyard and cash cow of the big manufacturers. Only by deeply cultivating the main business can the big manufacturers survive the cold winter, and even seek the possibility of growth against the trend when the industry is in decline.

—— evening

7. A shrewd entrepreneur can keenly realize that the profit of the enterprise not only comes from the new business growth curve, but also from the synergistic profit brought about by reducing the cost of the enterprise and improving the efficiency of the enterprise.

——Zhenghe Island

8. “This year’s situation is that the top brands with money are relying on their own cash flow to operate, and the white brands are doing well because they are cheap enough. It is difficult for cutting-edge brands, and it is even more difficult for cutting-edge brands without money. “

The words are rough and the rationale is not rough. Although there is no standard answer as to which year is the first year of new consumption, everyone knows which year is the cold winter of new consumption. The words “cost reduction and efficiency increase” have not only become the keynote of the entire consumer market, but will even run through all walks of life in 2022.

——Knife Institute

9. In the past year, the core theme of Tencent was to reduce costs and increase efficiency.

In the process, Tencent has also reduced peripheral businesses that are not suitable for the current and future development stages. Ma Huateng said that many businesses should be cut off as soon as they should be cut, and don’t miss it. It should be a habit to reduce costs and increase efficiency.

Pay attention to this sentence: reducing costs and increasing efficiency should form a habit. Not for a moment. Not once or twice. is a habit. What Ma Huateng means is that every business of the company must complete a closed loop and be able to be responsible for its own profits and losses. A career must be built on the basis of business. Don’t use long-term income to bear a small part of the loss, let alone tear down the east wall to make up for the west wall.

In the future, it will still be cold. Because after letting go, you will find that our opponent is not an epidemic at all. but cycles. Every piece of business must be stable and healthy. Every transaction, it is best to make money. Every action must be done right. In the face of an uncertain future environment, it is more important to pay attention to your own cash flow and profits. If the situation is not optimistic, we must be more cautious.

——Liu Run, founder of Runmi Consulting

3. How to reduce costs and increase efficiency?

1. In order to achieve value flow, one must be able to use the three tricks of increasing efficiency and reducing costs:

• Has effective output increased

• Is inventory down?

• Are operating expenses down?

——Jiang Hongfeng, Founder of Youlian Academy

2. The process of cost reduction is against human nature. Many small partners will be afraid of difficulties, especially for a certain category that is specifically responsible for a certain procurement. It is difficult to accept a 10% cost reduction, even a 10% reduction. Some companies not only do not recognize it, but may instead ask why they spent more money before being held accountable.

At this time, supporting incentive measures are very important. It ensures that activities against human nature begin to conform to human nature, especially the incentive mechanism, so that everyone can do things with confidence and confidence.

——Jiang Hongfeng, Founder of Youlian Academy

3. Since Kuaishou entered the management era of Cheng Yixiao, one of the core themes has been reducing costs and increasing efficiency.

In the fourth quarter of 2021, Kuaishou’s adjusted loss decreased by nearly 1.1 billion yuan compared with the previous quarter, which shows that Cheng Yixiao’s cost reduction and efficiency increase are working.

Due to the implementation of cost reduction and efficiency increase, Kuaishou’s losses were all below the market’s expected loss target, and the growth rate of management expenses and sales expenses was lower than the growth rate of traffic, indicating that while the ecology is growing steadily, the company’s operating and organizational efficiency It is indeed improving.

Regarding the future, Kuaishou Cheng Yixiao said that he will focus on and invest in four main areas:

It will continue to highlight the inclusive and balanced traffic distribution and private domain advantages that are different from other platforms; second, further develop differentiated content and improve content operation capabilities to strengthen and highlight Kuaishou’s unique mind; third, optimize the algorithm, and then increase User consumption on the platform strengthens the recommendation mechanism; fourth, it will continue to expand application scenarios to better serve the needs of users and enrich the supply of the community.

——China Entrepreneur Magazine

4. Enterprises that take “cost reduction” as the first priority goal often end up in the dilemma of “long-term innovation exhaustion”, because “increasing efficiency” is the “purpose” in business operations. Just as the so-called “increasing income and reducing expenditure” is not pronounced conversely as “reducing expenditure and increasing revenue”, the first priority of an enterprise at any time should be development.

——Liu Weiguang, Vice President of Alibaba Group

5. To “increase efficiency and reduce costs” rather than “reduce costs and increase efficiency”. Before cost reduction, efficiency enhancement emphasizes that enterprises should advocate development thinking and incremental thinking. Through continuous innovation in technology, business, and market, we can enhance the core capabilities of enterprises, increase overall revenue and reduce unit commodity costs. This is the correct path to increase efficiency and reduce costs.

In actual work, if cost reduction is put before efficiency increase, it is easy to direct the work machinery to simply reduce costs, ignoring the active thinking and implementation of various efficiency increase measures.

——Liu Weiguang, Vice President of Alibaba Group

6. At different stages of growth, enterprises will face a large number of “cost reduction traps” that have no innovative business value.

If a large amount of strategic resources are invested in “pseudo-strategic” directions such as “re-inventing wheels” and “self-built data centers”, it will not only cause a substantial increase in labor costs, time costs, and trial-and-error costs, but also give up our own resources. The “core competitive advantage” with the gradual reduction of the original marginal cost. Enterprise management should “resolutely refuse to invest and consume strategic resources in non-strategic directions.”

It is a more efficient and long-term development path to increase efficiency and reduce costs by making high-intensity investment in the direction of the core competitiveness of enterprises, and choosing excellent external resources for non-core capabilities to cooperate.

——Liu Weiguang, Vice President of Alibaba Group

7. Whether it is the macro demand for industrial upgrading or the goal of reducing costs and increasing efficiency of enterprises, “digital intelligence” is the greatest certainty, and it is also the only way for Chinese manufacturing enterprises to achieve transformation and upgrading.

——Tiger Sniff

8. Many companies will lay off employees as a way to reduce costs when encountering a crisis, but in fact, unless the cash on the company’s account can’t last for three months, don’t lay off employees easily to survive.

Because once layoffs, the entire company will panic, everyone’s combat effectiveness will decline, and the result is often not worth the loss.

——Zhang Lijun, Founder of Entrepreneurial Yeast

9. Cost reduction is not simply bargaining or cutting corners. It is to remove some unnecessary links and not spend unnecessary money.

——Li Bin, Founder of NIO

10. An important method or a simple and feasible method to reduce costs is benchmarking optimization. Benchmarking optimization, including external benchmarking and internal optimization, the core content is based on industry and internal excellent enterprises as benchmarks, with KPI as the core, regularly compares major economic and technical indicators, finds gaps, and learns from others’ strengths to make up for one’s own weaknesses , continuous improvement.

——Song Zhiping, President of China Association of Listed Companies and President of China Enterprise Reform and Development Research Association

11. Efficiency matters. Behind all management, the ultimate pursuit is to reduce costs and increase efficiency. To some extent, management is actually solving the problem of efficiency.

So, how to improve the efficiency of management? In my opinion, there are three key points: do the most important thing; spend time on important people; establish a unified management system.

——Zhang Lijun, Founder of Entrepreneurial Yeast

12. All companies are reducing costs and increasing efficiency this year. Some managers, the way to reflect human efficiency is to leave work later than anyone else, hold more meetings, do not help employees solve problems, but engage in internal friction in the team for their own face-saving projects.

In my opinion, the decline of a company begins with the proliferation of “formalism”. Management begins with stepping into the game and is destroyed by “formalism”.

——Zhang Lijun, Founder of Entrepreneurial Yeast

13. One of the directions for brands to reduce costs and increase efficiency is in the underlying organization: use good people, manage people well, and distribute money well.

Direction 1: One core manager has multiple functions.

If the overall temperament of a brand is more determined by the founder, the middle management of the brand is the guarantee to maintain the smooth operation of the business. Especially for small and medium-sized brands with an overall staff size of less than 100 people, the ability of core management is even more critical.

But it is difficult to find a middle layer that can be “plug and play”. Fuqing (a skin care brand under An De Putai) has made a new attempt. This year, Fuqing (a skin care brand under An De Putai) has adjusted its overall structure twice, and moved the entire Douyin section to Hangzhou for refined operations, but did not introduce too many core management personnel from the outside. The original internal core management personnel have multiple functions, and the ability of core talents should be brought into play as much as possible, and the corresponding returns should be matched at the same time.

In this way, it not only saves the time for newcomers to adjust, but also the original middle management will be more efficient in mobilizing internal resources, allowing the business to proceed more smoothly.

Direction 2: Cultivate the basic abilities of team members.

The larger the company and the more complex the business, the more corresponding cross-departmental cooperation will be. And the more under such circumstances, the more it is necessary to return to the cultivation of the lowest basic ability.

Fuqing (a skin care brand under An De Putai) shared that although everyone’s job is different, no matter what business it is, there are actually three steps involved in getting in touch with it. The first is to understand the business, and the second is to dismantle it. Solve the business, and the third is implementation.

In the first step, it may involve the understanding and construction of SOP (the capitalization of the first letter of the three words Standard Operating Procedure, that is, the standard operating procedure), which tests the ability of employees to think in a structured way. , You need to have a certain logical ability, and in the actual landing process, the person’s ability to express and communicate is examined. Business leaders may wish to start cultivating these basic capabilities.

Direction 3: Improve the incentive system.

The most important job of managers is to divide money, and “it is easy to go from thrifty to extravagant, but difficult to go from extravagant to frugal”, especially when the overall profit is tightening, what should be used as the core incentive index? How does the basic salary account for performance? How to make every penny play the biggest incentive role? All managers have to think about.

This year, Yemanman (Yemanman was established in 2020, starting with the vertical category of coconut baking, and will further expand to the field of coconut beverage and personal care after establishing brand awareness in the food vertical category) re-divided the business department, and in In May, the proportion of basic salary and performance was adjusted, so that the salary of personnel is more linked to business performance, and at the same time, the selection and adjustment of in-service personnel are carried out to ensure that the remaining personnel are those who can truly produce for the company. The effect of the adjustment is also very obvious. In May, the sales volume and profit margin of the brand hit a new high.

Similarly, Fuqing mentioned “management from the perspective of humanity and science”. They have adjusted the focus of the incentive mechanism to make the assessment indicators more related to business growth, and the goals set for each person are also clearer. Although no specific figures were disclosed, Fuqing said, “If the target results can be achieved, it will be very clearly reflected in the incentives.”

——Knife Institute

14. How to improve human efficiency? Almost all enterprises will regard performance management as a key point for the organization to improve human efficiency. Through performance management, motivate high performers, eliminate mediocre performers, and maintain the survival of the fittest in the organization.

However, many people have such a misunderstanding: they equate performance management with performance evaluation. In fact, performance appraisal is only part of performance management. If you only do performance evaluation and ignore other aspects of performance management, you will fail. The ultimate goal of performance management is to train and develop employees, not just to assess results.

——Zhang Lijun, Founder of Entrepreneurial Yeast

15. There is no business that is easy to make money in the world. Even in the process of rapid economic development, there are winners and losers in competition. There will always be troubles that are hard to earn in this world. So what to do? Only improve efficiency and reduce costs.

And how to reduce costs and increase efficiency? 1688 (a business started by Ali in 1999, mainly engaged in B2B domestic trade) aims at the difficulties of merchants, and helps merchants reduce costs and increase efficiency from three perspectives: cost, quality, and category. Direct procurement from source factories reduces costs; experts select escorts to ensure quality; internet gathers and provides a full range of products.

——Liu Run, founder of Runmi Consulting

16. Xu Zhijun, the rotating chairman of Huawei, said, “The biggest waste of an enterprise is the waste of experience”!

Now companies are often tapping their potential, especially under the pressure of bankruptcy, emphasizing the need to improve quality and efficiency. Even a piece of paper has to be printed on both sides, but precisely the knowledge in the company has not been opened up horizontally.

To be honest, there are 80% of cases in the company. Before you encounter and become a problem, other departments have already solved it, but you, who don’t know it, spend a lot of time researching and looking for answers every day.

For example, when he went to New Oriental to do projects, Yu Minhong once said that their employees are all knowledge workers. Because knowledge is intangible, knowledge workers have to be managed differently.

In the process of twisting towels to squeeze water (reducing costs and increasing efficiency), the management of knowledge or experience is a problem that is particularly easily overlooked.

Therefore, it is hoped that knowledge management will be used to unclog business, so as to gradually open up (share) the existing stock (experience).

—— Noteman

References:

1. Knife Institute: After chatting with several cutting-edge brands, we summarized 3 major directions and 10 suggestions for reducing costs and increasing efficiency;

2.36 Krypton Pro: Enterprises “reduce costs and increase efficiency”, not only layoffs are an option;

3. Yidian Finance: The wave of digitalization, the cost reduction and efficiency increase of small and medium-sized enterprises

4. Liu Run: The harder it is to make money, the harder it is to practice basic skills

5. Liu Run: Ma Huateng’s internal speech reminded three important things in 2023

6. Noteman: Behind the popularity of Zhicaiyun is the rigid demand of enterprises to reduce costs and increase efficiency

7. Noteman: Jiang Hongfeng’s 2023 New Year’s Eve Speech: Double Changes in Supply and Demand, Returning to Cost Reduction and Efficiency Improvement, and Focus Ability Improvement (Essential Notes)

8. Noteman: 2022, there is no chance to escape, and there is no possibility of shrinking

9. China Entrepreneur Magazine: Cheng Yixiao’s big test;

10. Noteman: Tencent Tang Daosheng: Next, we must be steady and steady

11. Noteman: The biggest waste of an organization is the waste of experience!

12. China Entrepreneur Magazine: Dialogue with Li Bin: There is only one thing in life worth regretting

13. Lanxi: The other side of big manufacturers who save money

14. Tsingshan Capital: 35 years old, Chinese-style youth | Tsingshan Capital 2022 annual consumption report

15. Zhang Lijun: When you are in trouble, do difficult things and you will get something

16. Zhang Lijun: In hard times, efficiency improvement is more important than cost reduction

17. Zhenghe Island: Song Zhiping: Operating 30

*The article is the author’s independent opinion and does not represent the position of Noteman.