Deep dismantling Tencent transformation logic: what kind of investment is Tencent doing?


Deep dismantling Tencent transformation logic: what kind of investment is Tencent doing?

The day before the national day, Tencent announced a new organizational structure adjustment. The original 7 big business groups have been integrated into the new 6 major business groups. This is Tencent's major strategic change and organizational adjustment, is "a company facing the future of evolution," Ma Huateng called "a new starting point for the next 20 years."

This year, Tencent has encountered some "troubles". The company's business suffered; its share price plunged by more than 30%; younger Internet companies grew rapidly and presented aggressive challenges. In contrast, Tencent seems to have become a symbol of aging, so Tencent's product capabilities, investment behavior, the overall strategy has been "hot debate". Especially the massive investment behavior that it does not seek to hold is even more doubtful. In this "internal and external troubles" situation and the background of the rise and fall of network public opinion, Tencent's "active innovation" is also a response to the face of doubt.

Last revolution

Before this adjustment, Tencent's strategy and organizational structure were formed in the last revolution 6 years ago.

Before 2010, start-ups in the Internet sector will always encounter an investor's question about the survival of the company. "If Tencent does the same thing, what do you do?" At that time, Tencent liked to "take the road of others and let others have no way to go". Discover what new business is promising, Tencent will replicate one, with its huge traffic advantage, can rapidly expand the number of users, business to do, forcing startups to eventually give up.

Later, after the "3Q" war, Tencent changed its strategy and began to build an open platform. In addition to the social and other key business Tencent does, most of the new business, Tencent no longer grab other people's "jobs," but to the partner to do, Tencent uses its advantages to play a role to help partners. Tencent's strategic transformation has been so successful that it can hardly be recalled now that Tencent "let others have no way out". The investment strategy of Tencent which has been widely discussed today is gradually formed from that time.

Tencent's investment, mostly in minority shares, does not seek control of the invested enterprise, more like a wide-ranging good-luck investment. This is very different from China's Internet giant Ali. Ali's investments are generally more closely related to its own business, and Ali tends to have greater control. By contrast, Tencent's investment, to quote a popular phrase, is quite "Buddhist".

This is precisely the focus of the Tencent's heated debate. Many articles believe that Tencent is "investment banking", Tencent has become a "investment company", Tencent is losing its past success in product strength, Tencent's innovation capacity is shrinking.

Is that so? How should we view Tencent's investment strategy in recent years? What is the role of Tencent in the strategy of Tencent's Ecologicalization? Next, we will understand Tencent's investment strategy from its business development, industry development and competitive environment. Then we will see what challenges Tencent's investment strategy will face in the future.

Understanding venture capital

According to the latest financial report, Tencent's investment earnings account for about one-third of the total profits. The current investment business is not a supplementary and supplementary business of Tencent, but a pillar business almost as important as the product.

In fact, not only Tencent, more and more enterprises in the main business outside the investment business, and investment business is also increasingly valued. CorporateVentureCap-ital (CVC) has become an obvious trend. In the fast-changing industry, short industry cycle, innovative and active areas, such as the Internet, high-tech areas, non-venture capital companies do investment everywhere, and even start-ups just a few years ago, are in the first-hand financing, one-hand investment.

This is closely related to industrial development and competitive environment. Tencent is an Internet enterprise, the Internet is a rapidly changing field, the demand and competition situation can be said to be changed three times a year. Ma Huateng has always been very worried about this, he said in an interview: "The Internet is a fast-changing industry, the competition is very fierce. In the past 12 years, my deepest experience is that Tencent has never had a day to rest easy, we walk on thin ice every day, always worried about a slip will be a fatal blow to us at any time, always worried that users will abandon us. How to deal with changes is a natural problem faced by Internet companies.

It is the ability of enterprises to survive and acquire gradually in the rapidly changing industrial environment to apply investment tools to fully establish the competitive advantage in the equity market. Unlike traditional independent Vc firms, venture capital has more emphasis on synergy with its own value chain. The primary issue it is concerned with and addressed is how to spread risk as much as possible and maximize opportunities to capture in a rapidly changing environment.

In the process of industrial development, not only the competition among enterprises with the same business, but also the structure of industrial chain is changing. As the strategic rhythm theory reveals, at the node of the industrial stage transformation, some links of the industrial chain will be revalued. Some links are no longer important, no longer the focus of competition, some links will become the key to the ability to form a valuation depression. Some links will be integrated and some links will be split. When the industrial development changes dramatically, the old industrial chain will be broken, new elements will be introduced, the entire industrial chain will be reorganized. The fluctuation and fluctuation of industrial chain will bring great risks to enterprises.

Turbulent industrial environment

In the era of Internet digital economy, industrial development is no longer as slow as it used to be, but on the same time scale with the development and change of enterprises. The external competitive environment of enterprises will change drastically. At this time, enterprises will have to face the problem of "turbulent industrial environment". Such risks are usually unacceptable to enterprises with traditional forms and single businesses. Therefore, through the investment behavior of enterprises, we can lock in the possible risks ahead of time and grasp the possible opportunities ahead of time, which is a "hedge" against the risks of the rapidly changing industrial environment of enterprises and an expansion of the enterprise strategy.

On the other hand, from the perspective of innovation, the investment behavior of enterprises is also an effort to keep the vitality of innovation.

After innovation has long been a hot word, its importance is self-evident. However, large enterprises have "path dependence". The organization, process, decision-making model and resource allocation of large enterprises serve the current business model. Innovation is not easy in a mature large enterprise. Therefore, the innovation of large enterprises is often easy to fail.

Therefore, many enterprises such as Tencent, such as millet, Ali, through corporate investment behavior, to promote collaboration between different enterprises, have to promote open innovation, in order to maintain a keen and innovative vitality.

Tencent and Ali have different business starting points, and their business logic is also very different. Ali started off with e-commerce, a fairly "clear" and potentially powerful scenario. So it's easy for Ali to expand from trading to payment, supply chain finance, logistics, enterprise cloud services and other different areas, and to extend from new retail to new manufacturing along the value chain.

Tencent started out socially. By contrast, socializing is a very complex activity, and it's not easy to generalize into clear "typical" scenarios that relate to all aspects of life. Although social intercourse has great potential for expansion, it is spread in all directions, not easy to include in a simple framework, summed up a simple logic, it is not easy to migrate directly from the consumer side to the production side. All these need Tencent to explore slowly. This is one reason why Tencent can not take Ali's approach.

Enterprises compete in product market, resource market and equity market at the same time. From the perspective of PRE-M model of strategic rhythm, Tencent is now working in three markets at the same time. In the product market, a large number of users and traffic resources are obtained through Weixin and QQ, and profits are obtained through games and advertisements; in the resource market, partners are helped to build their abilities through high flow; in the equity market, a flexible hedging mechanism and innovation network are built through investment. Collaterals.

Tencent in the rapidly changing Chinese market, the Internet, the mobile Internet digital economy, the growth of the world's most important Internet companies in the process, gradually grow into such a multi-dimensional active competition of a behemoth.

This strategic upgrade and organizational adjustment, according to Tencent's announcement, is a "proactive innovation" facing the new situation: "take root in the consumer Internet, embrace the industrial Internet," play the role of "connector" and "ecological co-builder," committed to "building a new generation of intelligent industry ecology".

Reflective ecology

"Ecology" is one of the hottest words in business observation and commentary in recent years. Everyone is discussing "business/industrial ecology". But in the context of business, what is ecology? Compared with its heat, I am afraid this question has not been thought deeply.

We know that "ecology" is a metaphor here. The world of industry and commerce is changing so fast, the competitive situation and living environment of enterprises are so complex that we can't keep up with it. So we borrow a term from biology / ecology to express the harmony we see in industry and commerce. To the highly complex systems of the industrial age. Although it is not possible to thoroughly discuss the most important features of business/industry ecology in a short space, we should make a superficial reflection on "ecology" before discussing the challenges Tencent faces in building industrial ecology.

Collection is not ecology. Ecology is certainly not a simple list of certain elements, many things simply arranged together, can not be called ecology. Unfortunately, we see a lot of expressions, the "ecological" instead of "set" does not cause misunderstanding.

There are at least two characteristics of Ecology: multi-agent, multi-faceted reciprocal structure.

Ecology can not be used to describe the diversification of a single enterprise. Ecology is constructed by multiple subjects. Multiplayer means that there are multiple purposes, and the ecology should allow different subjects to pursue different purposes. If all participants must pursue a common goal, it is not ecology, it may be a collective, or "organized collective". Organized collectivity and ecology are two different types of structure. There is no difference between good and bad, as long as they adapt to their business environment is good.

Many subjects do not become ecology directly when they come together. The reason why ecology becomes ecology is to have a structure to maintain its existence and operation. Ecology has to have a "synergistic effect" and participants have to get additional benefits that are not available outside the business ecosystem. Ecology should have a multifaceted structure of reciprocity, making it "different" niche.


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