Recently, a new concept, "Threshold of Peifomanoe," is increasingly attracting the attention of the corporate management community. A performance valve can be defined as a firm-determined level of performance. When the expected performance of a strategy is below this level, the firm abandons the strategy, and when the expected performance of another strategy is equal to or above this level Enterprises will choose to adopt this strategy. The concept of performance valve provides a new relative standard for explaining strategic decisions of enterprises. In the past, people believed that the relationship between expected performance and strategic decision-making was an absolute linear positive correlation, that is, the better the expected performance of the strategy, the better the chance of the strategy being Minna's chances: bigger, and vice versa. The concept of a performance valve shows that this theory may be completely wrong, because performance valves of different companies may be different. Therefore, although some strategies are expected to perform well, they may not be adopted by these companies because they are still lower than the performance thresholds of some companies. In other companies with lower performance valves, the chances of these strategies being adopted are very high.
Corporate values ​​play a decisive role in determining the corporate performance valve. In a business organization, each member, from the senior management of the company to the grass-roots staff, must often face various operational tasks at the same time, and must make independent decisions on these tasks within its scope of authority. The company's values ​​can be seen as the order in which each company's organization members determine these operations and their corresponding decision-making decisions, so that these operations and decisions are consistent with the company's overall requirements. Corporate value not only stipulates what a business organization can do, but also stipulates that a business organization cannot do anything, including determining the performance of the company.
Newly-established and mature companies, because of their different corporate values, have all of their identified performance valves, and thus their strategic decisions. This can further explain why existing companies can notice some opportunities earlier than some start-up companies, and have better conditions than start-ups to seize the high management forums. A project that makes small businesses exciting may not be necessary. Can cause the interest of big companies.
However, a higher performance valve may limit mature companies from entering a market that is smaller in scale and has lower returns, but is growing rapidly. Digital Equipment Corporation (DEC), once unique in the field of computer workstations, has learned hard lessons. In the 1970s, DEC continued to grow in strength by developing small workstation computers in its own way, and it could compete with IBM. At that time, DEC had all the technical capabilities to develop PCs. However, the mature DEC performance valve is too high. It requires the investment project's expected annual return to the new standards of corporate strategic decision-making/Yin Chen these opportunities, but they often explicitly refuse to chase these opportunities.
Mature companies are often large-scale and have more management levels. Therefore, the establishment of their values ​​and possible adjustments later are more difficult and their mobility is poorer. At the same time, mature companies often have more resources, have stronger competitiveness, and have more choice of investment projects. In addition, the selection of investment projects by large companies is subject to their own internal layers of arguments, and a complex investment decision process is initiated to evaluate a Small projects are also not economical. The value orientation of mature companies tends to favor projects with large investment scale, high near-term return, and low risk, and rarely choose projects with low investment, short-term benefits, and low risk. In other words, the mature performance valve of mature companies must often exceed 50%. The personal computer's profitability cannot reach such a level. Therefore, DEC company dismissed the personal computer market at the time. Just as IBM had given DEC the same small workstation computer market, DEC also made the same strategic choice. The development of personal computers triggered by Apple computers eventually pushed the workstation out of the entire computer market, so that in the late 1990s, the troubled DEC had to be acquired by the personal computer company Compaq.
Start-ups are often small, flexible, and highly mobile. Corporate values ​​are often concentrated in the entrepreneur’s intentions and goals, and can easily be quickly adjusted and implemented in every management forum of the company. corner. Compared with mature companies, start-ups tend to adopt a different value orientation and have lower performance valves. They often choose projects with small initial investment, high uncertainty and short-term benefits. Starting from these projects, start-ups can enjoy some rapidly growing markets without having to face the pressure of large companies. At this time, start-up companies often try to avoid attracting powerful competitors to pay attention to the growth of their market segments. When the market becomes attractive to large companies, it is often difficult for large companies to have corresponding technical and managerial knowledge. At this time, the new ventures that have set up a successful career have gradually accumulated enough strength to be able to make large companies. Block out of the market, and even in turn attack the territory occupied by large companies. The common successes that Apple Computer, Xerox, and Polaroid have developed from small to large have one thing, that is, they all rely on the development of products that big companies abandoned due to expected high yields. of.
Of course, start-ups do not rule out high performance but successful examples. But more is the lesson of blindly setting the performance valve too high and failing. This is known in management as "MousetiapError * / Mousetrap fallacy."
A word from Ralph Waldo Emerson: The boss made a better mousetrap. Even if he built the house in the woods, the world would take a road leading to his door. . "The mousetrap delay" is similar to the view that the Chinese wine is not afraid of a deep alley. That is to say, many entrepreneurs mistakenly believe that when they start a business, if they have a good idea or creation, a "golden idea" is inevitable. Will bring high returns.
When the dot-com bubble was once bright, as a few successful cases such as Yahoo and Netscape were over-exaggerated, many people believed in this "silicon myth": suddenly they had an idea and then went to Silicon Valley. The oaks on both sides shouted, "I have a good idea!" The venture capitalist tumbling on the oak will jump off to invest in you, and the new venture will be listed on the Nasdaq in the near future. Bring wealth to yourself. Under the influence of such blind and optimistic corporate values, entrepreneurs are prone to suffer from "mousetrap myopia" and are divorced from reality, setting the performance of innovative companies at a higher level.
They do not see the hard journey that most successful creators have gone through. Walmart, the founder of Walmart, established his first distribution center in 1969 to achieve scale operations. It was 20 years since he opened his first store; Microsoft is also in The 9th year of entrepreneurship reached sales of 50 million U.S. dollars, and most of the successful entrepreneurs in the country, such as Wang Xuan and others, have experienced a long period of hardships. "Mine bones are dead." Of the 21 million 26 Chinese and foreign companies that paid taxes in 1992, only 4% had sales above $1 million. Only 24% of companies established in the United States in 1985 were in 1994. Also survive.
In fact, creativity or creation is only the first step. It is just beginning to be practical and even worthless. During the high tide of venture capital investment in the 1980s, venture capitalists received an average of 100 to 200 start-up plans each month, but only 1% to 3% of them received funding. Even with financial support, a start-up company must make considerable efforts in all aspects to succeed. The overly high "performance of traps" for performance traps is due in large part to a lack of understanding of the highly competitive realities of commercial societies.
The performance valve developed by the company under the guidance of corporate values ​​will affect the company’s strategic decisions. The introduction of the performance valve concept once again emphasizes the importance of establishing a company that meets the requirements of the market and meets its own practical corporate values.
This has important practical significance for all companies, whether mature or new.
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