From "smile" to "kingdom"——Interview with Shi Zhenrong, founder of Acer Group

Shi Zhenrong, the founder of Acer Group, is a legendary figure. A few days ago, I made a special trip to Taiwan to interview him. On the way there, a friend from Taiwan who was teaching at an American university called. I told me the whole story of my trip to Taiwan, and he talked a lot to me first. There was pride in his tone. Yes, Shi Zhenrong is the pride of Taiwan, a small place in Taiwan, can make a leading international brand, is the first person in the Chinese world. In the late 1980s, Shi Zhenrong was selected by FORTUNE as one of the "25 People You Must Know When Doing Business with Asia". His "smile curve", which is well known in the industry, is the guiding line for Chinese manufacturing to become Chinese brands. Recently, Shi You and Mr. Chen Mingzhe, chair professor of Darden School of Business, who is about to take over as the chairman of the International Management Institute, co-founded the "Wang Dao Legacy Class" to talk about the "Wang Dao" culture and business management.

Our interview was conducted in the offices of Shi Zhenrong's Zhirong Group, located in downtown Taipei. Shi Zhengrong sat at the desk with a modest smile. The dizzying variety of awards, certificates, souvenirs and plaques of gratitude on the display shelves on both sides record the busy life of this entrepreneur with a forward-looking, innovative and socially responsible mission.

Our interview started with the brand, as everyone knows, the "smile curve" is the most high-level summary of Shi Zhenrong's successful experience of establishing an international brand in decades. 20 years ago, it was Shi Zhenrong's "smile curve" that made Acer see its direction and made its brand. Unfortunately, the electronics manufacturing industry in mainland China was just starting at that time, and it was still in a relatively barren stage. Twenty years later, the mainland electronics manufacturing industry, which used to "follow the steps", is no longer willing to endure the low profits of OEMs and is eager to be independent. However, dependence is easy and independence is difficult. After 10 years of talks about transformation, the road ahead is still vast. Compared with the foundry assembly with stable profits and controllable processes, the R&D design on the left end of the "smile curve" and the brand and service routes on the right end have high risks and difficult process control problems for enterprises. Many mainland counterparts are difficult to overcome. Now we look back at the road Acer has traveled, listen to its founder Shi Zhenrong's comments on the past and present, and hope that the domestic manufacturing industry can gain something.

Smile Curve is a high-level summary of Shi Zhenrong's successful experience in establishing an international brand. It is the enterprise competition strategy proposed by Shi, who was the chairman of Acer Computer in 1992, in the book "Rebuilding Acer: Creation, Growth and Challenge". The smile curve is divided into three sections: left, middle and right. The left section is technology and patents, the middle section is assembly and manufacturing, and the right section is brand and service. The curve represents profit. The smile curve has profit lows in the middle and profit highs in the left and right, so the whole curve looks like a smiley. The meaning of the smile curve is: To increase the profitability of a company, it is not necessary to continue to assemble and manufacture, but to move to the left or right end.

On the right side of the "smile curve", the road to Acer brand

Shi Zhenrong prefers to be called "Mr. Brand" rather than "Godfather of IT", probably because of his long-term brand dream. "Acer takes the road of brand first, and then OEM, which also reduces a lot of unnecessary confusion for the subsequent development of the brand." Talking about Acer when it was first founded in the 1970s, Shi Zhenrong was quite emotional.

Acer in the early years, just like its mainland counterparts who have just started a business, has no resources, no scale, and no chance to even OEM, so it chooses the brand-first approach. After accumulating a certain R&D innovation ability and brand awareness, market competitors also learned that Acer in Taiwan has the ability to provide OEM services, so they found Acer to do OEM and ODM.

From a larger perspective, the 1970s when Acer was born was the era of rapid development of microcomputers and microprocessors. He thought at the time that China had already missed the pace of an industrial revolution, and the opportunity of the second industrial revolution could no longer be missed, and the microprocessor was an iconic product of that era: "At that time, I thought it was the future development of science and technology. It is an inevitable direction, so Acer will go in this direction, and it will take 30 years." Shi Zhenrong never wavered about his original choice, "Insufficient ability, insufficient technology, insufficient resources, and insufficient image, it doesn't matter, it can be accumulated slowly with time. , since you have identified the direction, go ahead."

"For many mainland manufacturing counterparts who are accustomed to the 'OEM thinking', how to safely transform the brand is urgent. Shi Zhenrong said that Acer takes the brand first and then the sticker The road of cards."

Acer's path is also the same as Shi Zhenrong's tenacious style. It has been rebuilt many times but always moves towards the vision of the year. Acer succeeded and left countless applause. However, the mainland electronics manufacturing counterparts across the sea are caught in the predicament of Acer - how to survive the long period of exploration before the brand "breaks the cocoon and turns into a butterfly". Many mainland entrepreneurs want to learn from Acer's successful model and learn from the "smile curve" model of moving closer to the fields with high added value at the left and right ends, but these are easy to talk about and difficult to do. "Without long-term determination, it is very difficult for OEMs to turn to brands on the right end of the 'smile curve'." Shi Zhenrong was deeply touched by the difficulties of his counterparts in mainland China.

“It is much more difficult for an OEM to switch to a brand than the Acer brand, and the larger the OEM scale is, the more difficult it is.” Shi Zhenrong pointed out that with a large OEM scale and a small brand, business owners are willing to do it. Big or small; OEM is simple, brand is complex, business owners are willing to do simple things.

"In fact, the most important thing is to transform the 'big and simple' OEM culture into a 'small and complex' brand culture, which is a huge challenge for enterprises." Shi Zhenrong believes.

Shi Zhenrong gave two specific operational suggestions and one long-term planning suggestion for the mainland counterparts who are going to be transformed. Suggestions for specific operations: First, give up OEM as a whole, and resolutely make the brand. Even if the customer does not give the order, it will be recognized. "In the latter method, you should pay attention not to have conflicting relationships with OEM customers. For example, mainland manufacturers can focus on the mainland and Southeast Asian markets when making brands. Maybe this market is not important for OEM customers in Europe and America, so This will not cause conflicts, and at the same time, don’t easily direct the brand to Europe and the United States, which is difficult.” Shi Zhenrong reminded. The long-term planning suggestion he gave was, "The goal is set for 30 years, and then start from yesterday, from small to large. Even if you make a mistake, you will only pay the tuition fee, and you will be more confident to do it again."—— This is Acer's road to success, and it is also Shi Zhenrong's consistent concept of how the enterprise develops.

On the left side of the "smile curve", from OEM to ODM

Taiwan was mainly OEM 20 years ago. Today, Taiwan is the most competitive OEM service provider in the world and has become an international OEM. The core components of the service ecological chain. "Compared with the mainland, Taiwan's domestic market is negligible, which also forces Taiwan to rapidly move from OEM (original equipment manufacturer) to ODM (original designer, where one manufacturer designs and produces products according to another manufacturer's specifications and requirements) The entrusted party has the design ability and technical level, and the product is produced based on the authorized contract) transformation." Shi Zhenrong pointed out. In fact, it is precisely because of the "D" (design) that Taiwanese companies can develop designs on the left side of the "smile curve" and move closer to brands on the right side. The market is even located in Eastern Europe, Mexico, and the Americas to serve their customers. For more, please click on the next page

Compared to Taiwan's ODM ecological chain, the mainland is still in the OEM ecological chain, which is the lowest-end manufacturing and assembly part of the "smile curve". In this regard, Shi Zhenrong pointed out that the OEM did not enhance his added value to the left and right, and the company's advantage in the subsequent competition would be essentially lost. If mainland OEM companies want to go to the next level, either they will become ODMs, or they will gradually transform into OBMs and become brands.

"The lack of R&D technology and original design is a common problem in the mainland manufacturing industry. Shi Zhenrong believes that the mainland also needs to quickly transform to ODM. It takes 20 years to establish technology research and development. ."

From OEM to ODM, building the capability of independent R&D design is not a new topic, but how to solve it is the key. "Like making a brand, there is no tricky way. Core capabilities can only be built slowly over a long period of time. 10 years is enough for manufacturing, 20 years for research and design, and more than 30 years for branding in marketing services. It will take a long time." Shi Zhenrong admitted frankly.

However, Shi Zhenrong believes that compared with Taiwan, the mainland's manufacturing counterparts also have their own huge advantages: looking at the education level of the mainland, there are a large number of human resources, and there is an abundant reserve of talents with higher education; looking at the mainland market, the hinterland is vast; From the perspective of readers, the mainland can pay a lot less tuition; from the perspective of enthusiasm for learning advanced experience, the mainland is also not lacking. Among the various advantages, "In the long run, as long as we don't make too short-term profits, we can follow the steps and take the right path. In terms of objective environment, there are many opportunities for mainland enterprises to become world-class enterprises." However, he also pointed out that if short-term profits are used for Unscrupulous means, such as copycats, infringements, and unspoken rules in various industries, can only be worth the loss, and the price to be paid in the future is also high.

Of course, the three words "not short-term profit" in Shi Zhenrong's mouth sounded light, but it was not easy to implement. At present, many mass incidents caused by short-term profits have been exposed in the mainland, such as poisoned milk powder and high-speed rail incidents. "Zhongyun said that the objective environment requires everyone to pursue short-term profits. This was the case 20 years ago in Taiwan. Everyone rushed to the profitable industry, and everyone rushed to do the profitable business together. Although it is not necessarily an infringement, it is negative for the industrial environment. The effect will lead to vicious competition among groups. However, unlike the mainland, because Taiwan's local market is small, it is forced to go international as soon as possible, and international competition has assimilated the entire Taiwanese business model, and Taiwanese companies are more likely to understand international operations. Therefore, the current phenomenon in mainland China is relatively rare.” Shi Zhenrong said.

"Manufacturing is an industry with strong engineer plots. Many Chinese engineers have accepted the educational concept of 'technological breakthroughs' to achieve life from childhood. They are dismissive of communication with customers, thinking that there is no technology, not knowledge. I often hear Others say that doing high-tech is very knowledgeable, but I always say 'wrong, wrong', because selling toilet paper to make money is also very knowledgeable, these are all knowledge."

"Smile" Xinde: To transform the Chinese Manufacturing culture concept

In recent years, Apple has caused a huge shock in the PC industry. One iPhone and one iPad have turned the PC industry upside down for a long time, and even many senior people in the PC industry have released PC The argument of death has caused many manufacturers to be stunned for a while. In this regard, Shi Zhenrong did not agree. "The PC is actually changing all the time. We were talking about it in the 1990s. The Internet came, but the carrier of the Internet is still the PC. The PC has always played an important role in the whole change. Apple's technology brought by tablet computers and smartphones The change is actually because the PC has accumulated technology for so long, and in fact, Apple's development is complementary to all the technical architectures in the world." Shi Zhenrong said.

As for the future trends of the PC industry, Shi Zhenrong pointed out that the global PC industry that has gone through the Red Sea competition requires new thinking to be a winner. What we need to understand now is which new directions to adjust in the entire infrastructure. In the past, the PC industry was striving for faster speed and larger memory storage, but this was not enough. "Now the PC industry should think from the perspective of being easy for customers to use, applications, and services to be more convenient. This is a major trend. Only in this way can these technologies be truly popularized and more people can enjoy the benefits of technology to human beings. Contribution, in this case, what PC companies have to face is to add more software and integrate more services on the original basis, which also requires the traditional manufacturing industry to be more sensitive to market dynamics. In other words, through the platform of tablet computers and smartphones, more added value, products and services can also be provided, in fact, everyone has a great opportunity." This is Shi Zhenrong's point of view.

However, the problem comes again. The culture of PC hardware manufacturers is completely different from the culture of software and services. Hardware manufacturing must be controllable, quality, and strictly follow the process, full of "hard, harsh, serious" cultural symbol, which is also the consistent style of hardware engineers. At the same time, it is often enough to understand the needs of a few major customers in manufacturing, but now it is necessary to classify and customize the needs of millions of customers, which poses a new challenge to the entire management culture of traditional PC manufacturers. .

Today, the "smile curve" theory extends beyond the PC industry. However, Shi Zhenrong himself said that the "smile curve" theory is also prone to deviations when it is put into practice. It is said that technology is on the left end of the curve, and it is taken for granted. But he also sees an imbalance in the "smile curve" caused by overemphasizing technology. He said: "It is true that our demand trend in the next stage is in conflict with the manufacturing culture. For example, Sony failed to completely integrate the entire manufacturing culture into an ecological chain of convenient services, but Apple did. Why?" He replied: "Because many engineers in Asia take the traditional concept of 'technology as innovation and breakthrough', they have not been able to change to the concept of 'customer service as the center', and Acer's problem is also the same."

Facts As early as 1984, Shi Zhenrong tried to use the argument that Zhu Bajie would also use computers to change the mindset of his colleagues as "technical pioneers". This view once attracted the attention of the industry. In 2000, when Acer split up, he also continued to emphasize this change of concept.

"I've been speaking for more than 10 years, but the effect is very poor and useless. Everyone doesn't listen to me." Shi Zhenrong smiled bitterly. Why can't the concept turn around? Because "culture is difficult to change in a short period of time, engineers in Asia, such as mainland China and Taiwan, are highly educated. The educational philosophy they received since childhood was to talk about how to make breakthroughs in technology and how to innovate in technology, which gives them a sense of achievement and mission, but When they see customer communication, they often dismiss it, think it's too simple, think it has no technical content, let alone knowledge. So I often hear people in other industries in Asia saying that high-tech is very knowledgeable, and I say 'wrong, wrong' It's because selling toilet paper and making money is also very knowledgeable. These are all knowledge. But the engineer group just thinks that if you don't know the technology, it's not knowledge. The market is a bridge, what is the use of engineers?" He further pointed out that if there is no way for China's educated people, one day they will suffer higher unemployment than uneducated people, This is the case in Taiwan now. For more, please click on the next page

Looking back at the actual situation in the mainland, the phenomenon of technology for technology's sake obviously exists. Would you like to listen to Shi's voice?

Using "kingdom" to fight against Western-style "overbearing" profit-seeking thinking

The culture of Chinese manufacturing is difficult to change in the short term, so what is the current cultural situation of Chinese business management? "As Chinese entrepreneurs, from the perspective of management, we need to learn from the West, especially the essence of management is to develop a system after the occurrence of people's management behavior, and then according to this system, you can effectively expand and compare , copying, learning, Western research in this area is fruitful." Shi Zhenrong said.

"We have followed the West in the past 30 years, will we continue to do so in the next 30 years?"

We put Shi's remarks in the context of Acer's rapid growth in the past 30 years. will have a deeper understanding. In the initial stage when many Chinese enterprises shyly extended their branches of internationalization, Western learning in management thought was an unquestionable mainstream trend. This is 30 years of great changes in the management environment in Greater China. It is unavoidable that the management trend of fusion of the West and the East has been greatly benefited. But today, after Chinese enterprises have gradually matured, independent thinking will rise. The dispute between the management system and management concept between the East and the West has been going on for quite some time, and it is inevitable that there will be different opinions. In this regard, Shi Zhenrong directly pointed out:

"If you only apply Western management theories to the East, this road will not work". He explained that the East has its own mode of thinking, and it is especially important to think from the inside, which is our characteristic from the inside out; while the West has a model from the outside to the inside, the external environment has certain requirements, and people are required to Do it according to the system and process. The different cultural concepts of the East and the West are more prominently reflected in enterprise management. But "Looking back, you are in a Chinese company, and the people you manage are oriental people, and you can only use oriental ways to integrate their concepts and work hard for the company's goals."

In the next 30 years, our Chinese companies will How to compete with Western companies, especially in terms of management model? Shi Zhenrong chose the "kingdom". He said: "Compared with the hegemony of the Western profit-seeking model, we need the 'kingdom' model. What is the 'kingdom'? The 'kingdom' is to create a community of interests. From a macro perspective, it protects the interests of the society as a whole, and from a micro-enterprise perspective , is to take care of his customers, his employees, shareholders, suppliers, dealers, banks, and his social environment, create his value for his stakeholders, and value the balance between them.”

The structure of the “Kingdao” enterprise management will be explained later, which will be skipped here for the time being. We know that the spirit of "kingdom" originated from the depths of traditional Chinese culture, but it is not easy to put "kingdom" into practice. Back then, Confucius lobbied the princes of the Spring and Autumn Period, and no one was willing to use his academics. Instead, many princes at that time considered it to be a rhetoric. . And from the perspective of actual business operation at the moment, there are priorities and stages, and each stage has its own emphasis. Can a "kingdom" concept system support the future of Chinese business management?

"It's just a theory and no one has implemented it yet". Shi Zhenrong himself admitted. But he is a persistent person, and he will do it when he has identified the direction. One step at a time.

Dr. Shi is chatty and the conversation was very pleasant. We also found that he was very filial to his mother, but he did not pass on the family business to his children, which shows that he cannot be judged by tradition for his ethics. He even told us anecdotes about his youthful college days, including founding photography, bridge and tennis clubs. Of course, these also developed his interpersonal and organizational skills. "There is no tiger in the mountains and the monkey is called the king", this is his memory of his own situation when he was in Jiaotong University. He is playful and active. His signature characteristic is that he likes to do things differently from others, so he will use "Me too is not my style" ("follow the not-me style") to describe one's own character. Regarding ancient Chinese and English, Shi Zhenrong laughed, saying that he doesn't have that talent. What he requires of himself is to make it understandable and interesting to everyone. For example, if today’s narration does not make the interviewer’s eyes light up, he has to go back and review slowly, and next time he has to figure out a way of speaking that can make the eyes of the listeners sparkle – in fact, I think it was at least in our interview. He has achieved his purpose. On the way back, from "smile" to "kingdom", I have been thinking. I thought a lot, not only about the theory itself, but also about the practice behind the clues of theoretical development, and about the personality and vision of entrepreneurs. Along the development track of "smile" and "kingdom", what unfolds in front of us is the grand picture of the development of national enterprises in Greater China in the past 40 years: there are failures in the slow mud, there are successful gallops, and there are already overruns. There are many dangers and obstacles that are still facing each other, and there is a trend and prospect of "kingdom" widening, accommodating hundreds of rivers and rushing to the sea. When we asked about the beginning and end of the "King Dao" thought, Shi Zhenrong's answer was "it can be said that my Dao is consistent" - indeed, what can be seen here is a constant heart in dynamic changes. I also thought further, and I also thought of Professor Wu Xiaobo's recent interview from the second innovation to inclusive development. I analyzed the differences between the two theories on both sides of the Taiwan Strait, but I was even more surprised by their deep structure. Communicability. "Kingdom" is the truth that Shi Zhenrong realized in his 40-year career. It is also worth noting that Shi Zhenrong said that the Western management system is not without the spirit of "kingdom", and believes that in the end, both the rule of man and the rule of law need to be paid equal attention to. Moreover, "kingdom" also conforms to the laws of Western development - so I have to think further, remember George Bernard Shaw said, There is only one religion, though there are a hundred versions of it. After all, no matter what, the ultimate goal of human beings is the same.

Brief introduction of the interviewee:

Stan Shih, born on December 18, 1944 in Changhua County, Taiwan, experienced hardships in his childhood. Graduated from the Institute of Electronic Engineering, National Chiao Tung University in 1971. After obtaining a master's degree, he joined Rongtai Electronics Co., Ltd. as a designer. In 1976, he founded Multi-Tech International Corporation, which was later renamed Acer Corporation. In 1981, it began to produce its own brand machine. In 1988, the Acer computer became a hit product. In 1992, Shi Zhenrong rebuilt the new Acer and was awarded an honorary doctorate by National Chiao Tung University. In 1996, he was selected as one of the 25 best corporate managers in the world by the American "Business Week". Now he is the chairman of Zhirong Group and chairman of Zhirong Foundation.