Chapter 18 Diseases of Large Companies and the Business Unit System

After finishing the transatlantic video conference with Jeff Bezos, Wu Siyuan temporarily turned his attention away from the [audition] matter and devoted himself to another important work.

The group’s organizational structure has been adjusted!

Over the years, [Chaoqun Group] has developed step by step from a fruit stall, and its business has become more and more complex, from fresh food retail to agricultural planting, animal husbandry development, environmental recycling, and now the information technology industry, etc.

It seems to be developing very prosperously, like flowers blooming, and the performance is rising steadily.

From the outside, there is nothing wrong with it.

But in fact, the group has many businesses, poor internal communication, various departments and subsidiaries working independently, obvious duplication and loss, and the disease of large companies is very serious.

[Large company disease] refers to a situation in which, after an enterprise develops to a certain scale, various crises that impede the continued development of the enterprise unknowingly arise in various aspects such as the enterprise management mechanism and management functions, causing the enterprise to gradually regress or even decline. Chronic syndrome.

Symptoms of [Large Company Disease] generally include: "obesity" with poor information, rigid bodies, organized departments, and bloated organizations; "sluggishness" with unclear responsibilities, complex decision-making, and slow action; the growth of egotism, and each individual working for his or her own purposes. War, a "disorder" with difficulty in coordination; a "rigid mentality" that results from being content with the status quo, working behind closed doors, and sticking to routines. "Sloth" characterized by lax discipline, low efficiency, and lack of passion for work; "Responsibility Deficiency Syndrome" characterized by not working seriously, making excuses when encountering problems, and having a weak sense of responsibility; "feeling good about oneself, taking things for granted, not going deep into reality, and lacking risk awareness" "Blind Optimism", "Official Style Syndrome" of extravagance, arbitrariness and lack of concern for subordinates!

Looking at it this way, many symptoms have appeared in [Super Group], or problems have already occurred.

The emergence of [Spark] software has only improved the convenience of some tasks, but it treats the symptoms rather than the root cause, and the underlying problems still exist.

In fact, the reason why the [Spark] software appeared was because Wu Siyuan was aware of some problems within the company and specially asked [Four-Armed King Kong] to develop it. It was not entirely to monitor the company's corruption, but judging from the current results , not very ideal.

If this [big company disease] is not contained and rectified in the early to mid-term, the company will become more and more like a heavy elephant, and it will be difficult to even turn around, let alone dance.

Huang Yuping had told him more than once about the management difficulties that would arise as the group's business grew larger and larger.

Wu Siyuan also feels this way.

Therefore, it is urgent to carry out self-reform.

After many discussions with Huang Yuping and other senior executives, Wu Siyuan held a group executive meeting.

At the meeting, Huang Yuping, as the host, announced the group's organizational structure adjustment plan to the CEOs of the group's major branches. He would cancel some subsidiaries and adopt a divisional structure.

The divisional structure first originated from General Motors in the United States.

In the early 1920s, General Motors merged and acquired many small companies. The scale of the company expanded rapidly, with an increase in product types and business projects, but internal management was difficult to straighten out.

[P. Sloan], who was the executive deputy general manager of General Motors at the time, referred to the experience of DuPont Chemical Company and completed the reorganization of the original organization in the form of a divisional system in 1924, which made General Motors' reorganization and development obtainable. It achieved great success and became a typical example of the implementation of the business unit system, so the business unit system is also called the "Sloan Model".

At the same time, it is also called "federal decentralization".

The business unit system is to establish several business units according to the business operations of the enterprise, including dividing departments by products, regions, customers (markets), etc.

The business department is a department under the macro leadership of the enterprise that has complete operating autonomy and implements independent operations and independent accounting. It is a profit center controlled by the company and has the functions of profit production and operation management. It is also a product responsibility unit or market responsibility unit. , responsible for unified leadership of product design, manufacturing and sales activities.

In China, the Internet industry is the most enthusiastic about setting up business division systems.

Because the business unit system has many advantages:

First, each business unit has its own products and markets, can plan its future development, and can flexibly and independently adapt to new market situations and respond quickly. Therefore, this organizational structure has both a high degree of stability and a high degree of stability. Have good adaptability.

Second, decentralization of power will help the top leadership get rid of daily administrative affairs and the complicated affairs of directly managing specific operating work, and become a strong and powerful decision-making body. At the same time, it will enable each business unit to exert the enthusiasm and creativity of business management, thereby improving The overall benefit of the enterprise.

Third, although the business unit manager is only responsible for leading a unit that is much smaller than the company to which he belongs, because the business unit has its own system and operates independently, which is equivalent to a complete enterprise, he can withstand the challenges faced by the company's senior managers. Various tests. Obviously, this is conducive to cultivating comprehensive management talents and reserve cadres for the future development of the enterprise.

Fourth, as a profit center, the business department can not only establish standards to measure the work efficiency of the business department and its managers, conduct strict assessments, but also easily evaluate the contribution of each product to the company's total profits, which can be used to guide strategic decisions for corporate development.

Fifth, dividing business units according to products facilitates the organization of specialized production, the formation of economies of scale, the use of special equipment, and the maximum use of personal technology and professional knowledge in the fields of production and sales, thus conducive to improving labor productivity and Enterprise economic benefits.

Sixth, there can be comparison and competition among various business departments. This will enhance the vitality of the enterprise and promote its overall development.

Seventh, each business department operates independently and has clear responsibilities, so that target management and self-control can be effectively carried out. Under such conditions, the management scope of senior leaders can be appropriately expanded.

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What the Internet industry pays attention to is the word "fast", small steps forward and rapid iteration.

The flexibility of business units is better than the traditional bureaucracy and is more suitable for the Internet industry where organizational development and changes are frequent.

Of course, the divisional system also has its own inevitable shortcomings, such as the tendency to breed localism, increased expenses to a certain extent, and high requirements for headquarters management. Otherwise, the divisional system may easily lose control and in turn drag down the company.