Wang Qunbin, CEO, Fosun International
The most important item in any industry is to continuously develop, thus I want to share my thoughts on how Fosun efficiently creates value and continuously evolves.
Entrepreneurship is the best way to create value, and the core ability to last businesses is technological innovation.
Fosun has a goal to achieve two "121"s. One "121" is to have the company be a life-long company that lasts at least 121 years old; The other "121" is for people to be healthy, happy and wealthy enough and live to 121 years old. To achieve such a goal, Fosun is focusing on technological innovation.
Fosun International ranks 416 on 2019 Forbes Global 2000 list among listed companies. Our speed is still not as fast as other internet companies. It’s not only important to maintain stability, but also efficient and fast developing when managing a company. Because we are creating value for the society, financial indicators and other business indicators are very essential.
Cash flow is an important indicator for a business organization’s stability. Fosun not only considers cash flow, but also emphasizes on improving our ratings from a healthy financial perspective. Now we are actively communicating with Moody's and S&P every year. Another indicator of steady performance is following the local regulations. Fosun puts a great importance on corporate governance and compliance as we have an outstanding legal team on board from the very beginning. Now we have more than 100 lawyers globally in different offices, and the entire operation of the company is supervised under our general legal counsel to make sure we are complying with local regulations in different markets.
The evolution of business organizations has a frame of four parts - business culture, business capabilities, organizational capabilities, and technology-driven systems.
First, how a company develops mostly is based on its business culture.
The development of business culture is a dynamic process. For example, we didn’t have Fosun’s value of “cultivating ourselves and helping the world” in the beginning, but it gradually formed after several adjustments. Generally, an innovative organization could propose business values after one or two years of its establishment. And it takes another three to five years to be relatively matured. "Cultivating ourselves and helping the world" was formed when Fosun was three years old back in 1995. But it was two years ago we decided Fosun’s mission to be to “create customer-to-maker (C2M) ecosystems in health, happiness and wealth sectors, and providing high-quality products and services for families around the world.”
Secondly, I want to talk about the evolution of business capabilities.
Usually, an ecosystem is formed by multiple industrial groups with multiple brands, developed from multiple products, each built from ground zero to one. To create such an ecological and commercial system, we need to add strategic systematic thinking approach to product development. We hope our teams think about the long-term. We don’t only anticipate what will happen in ten years, but also the ultimate possibilities. We should take one to five percent of our time to consider the future of the core business capabilities, and consider how to create value to be unique in the market.
Fosun’s C2M model has tremendous opportunities to add value in our business, since we are communicating with our customers all the time.
We have a huge investment in technology research and development every year. Technological innovation is leading our business growth.
We also have another operational philosophy - industrial operation and investment. But investment eventually serves industrial operation.
Globalization in both directions is also important to us, as in upgrading Chinese consumer’s consumption demand while providing global top-tier brand products. On the other hand, we need to promote domestic resources with global markets in developing countries.
The third is organizational capabilities.
The evolution of organizational capabilities is easily overlooked. Why is Alibaba so successful? I think it’s because of their organizational structure, not just their business model nor their technology. I think our management team should spend time to improve the organizational capabilities to a higher level. Sometimes our team is not bad, and reports are also good, but it needs more organizational capacity to be a better team.
One of the organizational ability indicators is how many qualified partners. We have three requirements for teams and partners: Performance focus, sharing the same business values, and make contributions to the organization. A team should either have a clear plan and approach, or if you don’t have a specific plan, you could have someone fully authorized and approve plans afterwards. We need to have team members independent to make their own decisions. We should learn to use auditing to balance authorization.
We should always make top-level structural adjustments, effectively organize talents, and establish a cooperative internal organizational structure. The top management team should form a stable triangle by chairman, co-chairman, CEO, or other leader. In this way we are performing by collective wisdom.
The fourth is the evolution of technology-driven systems.
Two percent of talents come from Fosun’s management level, 18 percent are in mid-management level, and 80 percent are frontline employees. We are planning to have an interactive technology platform, and make the system support employees more often. The platform will optimize process and design incentives. We are considering adding more talents with computer science background to the management level. In the future, we will try to use AI to solve more problems in corporate management, customer services, and other areas.
We also have an excellent empowerment ecosystem to connect global capital markets, marketing, investment, and innovations. We have shared supporting functions, such as the Finance corporate auditing center with more than 400 active company members. We are also building a recruitment center to provide high efficient and low-cost services for human resources. There’re other shared cost centers. Fosun is aiming to build such an intelligent ecosystem to serve the entire ecosystem, and finally create value for our society.
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