Why do some companies with strong technology still fail to get good profits? Why are some good quality products not recognized by the market? Why some very good project in the end blood money?

It all boils down to the fact that these enterprises have neglected the innovation of business model. on September 19th, in order to solve the confusion of entrepreneurs, XUEWEI International Business School invited Prof. Guo Haichen, visiting professor of Antai College of Economics and Management of Shanghai Jiaotong University, to bring two days of "Business Model" for the students, so that they can re-understand the value of the innovation of business profitability model in the enterprise.

Prof. Guo Haichen

Prof. Guo Haichen is a visiting professor of Antai College of Economics and Management of Shanghai Jiaotong University, former CEO of Ovet Information System (a subsidiary of Bertelsmann Group) in China, CEO and partner of Nano Software, and columnist of the First Financial Times. He has been the lecturer of customized EE for Nordic NHH Business School, EMBA for BMI in Lithuania, EMBA for ESCADE in Spain, and Women Leadership for Agricultural Bank of China.

At the beginning of the course, Prof. Guo emphasized the importance of business profitability model with classic cases such as the ancient business sage Fan Li. He converted the language of the ancient business sage into a modern business logic framework, pointing out to the students the 3 practical weapons that work well for business and profitability models, i.e. CRM, big data, AI, branding, and content marketing.

When talking about how venture capitalists look at a company's business profitability model, Prof. Kuo told the students that the industry landscape determines the outcome, concentration determines whether or not there is pricing power, and that government support is not a good thing, it increases supply and industry rivals, and in addition the government's DNA is incompatible with innovation.

In addition, Prof. Guo also pointed out to look at the long-term economic characteristics of the industry and the intrinsic qualities and so on. The business that does this best is Disney for 2 reasons, the first being that Mickey Mouse and Donald Duck don't raise wages; the second being stable and predictable future income.

Any business wants to have high earnings, so how do you do a high earnings model? Professor Guo proposed 4 key points: advertising investment, R&D investment, product positioning, and differentiated marketing.

Among them, 6 key signs of differentiated marketing:

brand (such as awareness, reputation), repeat customers and customer viscosity, unit price is not too high (easier to high frequency), high conversion costs (price increases do not affect sales), service network and sales radius (such as a small radius is an advantage, a small radius is only needed to beat the region), regional concentration is a good idea. , high regional concentration is in play), first-mover advantage (such as market influence, contacts, industry insights, etc.).

In the good company has 3 elements of knowledge to explain, Professor Guo listed: in line with the company's profitability model, quality and key 2 elements, of which the key 2 elements refers to the company to do things that others can not do, the company to do things that can be repeated to do.

1. What can we do about consistency in profitability model and execution?

Professor Guo concluded: "Profitability model is that you think about how to make money, consistency is that you need to optimize often, or called strategic optimization, you need to check once a year, there are problems to solve the problem, timely diagnosis. And then there is the pass-through thinking, out of the problem itself, to re-look at this profit model."

2. Since the launch of Jitterbug in 2016, it has been loved by young people in China, and it has also spawned hundreds of multi-million Vs, but the traffic realization has not done as well as expected, what do you think about the profit model of Jitterbug's cash?

Professor Guo said: "Jitterbug is a short video, and the business is actually very suitable, and its traffic has been quite successful. But among the traffic, not everything can be realized, let's say humor, although the traffic is very good, but its realization efficiency is relatively low; let's say **** Ming, trust, etc., their realization efficiency is very high. So this process, but also to optimize, you can not say that it is not successful, just still in a groping stage. Shake, fast hand are second and third tier small town youth, so different platforms, facing different markets, have different approaches."

3. Just now in the classroom, you communicated and interacted with your classmates very well. What is your best advice on how to put this class into practice?

Prof. Guo emphasized: "Then we have to use it more, I generally recommend that students learn in the classroom, go back to the company's various departments to discuss with the head, to see if there is a way to combine the real world. Only in this way, the things learned can be transformed into real things, otherwise it is too bookish."

4. Do you have any words of blessing for the students of Xuewei and Business Model?

Prof. Guo simply summarized it as, "Ten thousand miles, ten thousand books, ten thousand kinds of people."

Finally, Prof. Guo also prompted the students that, regarding the innovation of business models, the obstacles to innovation are internal, and there are 4 limits to break through the bottleneck of enterprise development:

First, the limit of organization - organizational form and system, capital and governance structure;

Second, the limit of entrepreneurial ability and limits of values - profound and broad learning, insight, smooth information channels, limits of personal and organizational leadership, business leadership, values;

Third, limits of the external environment - market size, market structure, government control methods, institutional environment constraints;

Fourth, the limits of the business model - the scale of the business model decision, etc.

This course is full of dry goods, Professor Guo Haichen explains the technique, professional business theory knowledge and depth of the popular business case analysis has left a deep impression on the students. During this period, he communicated and exchanged ideas with the students in a more in-depth and interactive manner. After the class, more than 90% of the students thought that they had gained a lot from participating in this study and looked forward to the next course!