Volume Three: Ascending High to Look Far Chapter 64: Development Strategy (Part One)

After taking office, I gradually integrated case studies of successfully reformed enterprises into our internal propaganda and study programs. I also dispatched personnel to visit and learn from some of these successful enterprises, enabling our cadres and employees to foster a yearning for reform by understanding the realities of their success.

Of course, relying solely on these measures was not enough. I still needed an opportune moment and a suitable channel to convey my thoughts to the cadres and employees without arousing their opposition.

Finally, a favorable opportunity presented itself. Several months after I assumed office, the State-owned Assets Supervision and Administration Commission of Huajiang Province required some of its subordinate enterprises to formulate development strategies. This was the first time such a requirement had been issued for state-owned enterprises in Huajiang Province.

Upon receiving this notice, I quickly realized that the opportunity had arrived. This was the exact chance to embody my vision for the company's reform and development into a formal strategic plan.

However, after careful consideration, I realized that directly declaring this reform vision myself and then organizing people to write it into the strategic plan, while not impossible, could easily give an impression of subjectivity and might encounter skepticism and resistance.

After thorough deliberation, I concluded that hiring an external intermediary agency to draft this strategic development plan was the most appropriate course of action. After all, none of us had ever drafted a strategic development plan before, and we lacked professional expertise. Thus, hiring an agency was a well-justified move. More importantly for me, expressing my thoughts and ideas through an intermediary agency would appear much more authoritative and objective. It would also allow me to gauge everyone's reactions while giving me complete flexibility and control to advance or retreat.

I discussed the matter of hiring an intermediary agency to draft the strategic plan with my father-in-law, Shu Zhongquan. He approved, noting that while the State-owned Assets Supervision and Administration Commission did not make hiring an agency mandatory, it actively encouraged enterprises to do so when formulating strategic plans.

Given the situation I was facing, hiring an intermediary agency was indeed the most suitable choice.

Encouraged by my father-in-law's words, I became even more determined to hire an agency. I consulted several friends and asked them to recommend relevant institutions. My friend Duanmu Wuyang recommended a top-tier international consulting firm named Cargebet, which caught my interest, though its fees were relatively high. Preliminary inquiries arranged through my staff indicated that the fee would be around one million to one point five million RMB. Nevertheless, after careful thought, I decided that spending this money was worthwhile.

Accordingly, I instructed the office responsible for coordinating the strategic planning work to propose this matter at the general manager's executive meeting. Although the cost exceeded one million RMB and would ultimately require board approval, I wanted to sound out the members of the leadership team first to understand their perspectives.

As I expected, many attendees at the executive meeting felt the fee was too high. Director Shi, on the other hand, remained completely silent. Ever since he took on the role of the supervisory board convener, whether attending board meetings or executive meetings as a non-voting participant, he rarely spoke except on matters concerning the supervisory board. He completely refrained from interfering with my decisions. For this, I felt a genuine sense of gratitude; had he chosen to stand up and oppose my views on many issues, things would have been very difficult for me.

With some supporting the proposal and others objecting, it wouldn't have been impossible for me to make an executive decision directly. That was the advantage of holding executive power—having the final say. Yet, I still wished to avoid leaving others with the impression that I was overly arbitrary or prone to autocratic rule. Therefore, my final decision was to invite multiple intermediary agencies to undergo a competitive bidding process. Furthermore, at my suggestion, the deputy director of the Planning Division at the State-owned Assets Supervision and Administration Commission was invited to serve as one of the judges for the selection.

Naturally, the final result aligned with my intentions. Cargebet won the bid because the other companies lagged significantly behind in terms of professional capability. According to feedback received after the meeting, the deputy director of the Planning Division considered the professional competence of the drafting institution to be the most crucial factor. Ultimately, the finalized cost was negotiated down to eight hundred thousand RMB, which came as a great relief to me.

Once Cargebet won the bid, they promptly organized a team and stationed themselves at our company. I demanded that the entire company cooperate fully and treat this undertaking as a primary current priority.

Upon settling in, the Cargebet team conducted a comprehensive due diligence investigation covering the company's historical evolution, operations, finance, assets, human resources, and legal affairs. In addition, they prepared to conduct detailed interviews with senior executives, particularly myself.

The interview with me was led by the head of their team, a young woman named Qin Yan who appeared to be under thirty years of age. Reportedly a Ph.D. graduate who had returned from studying abroad, she wore her hair short, giving her a crisp and efficient demeanor.

Qin Yan possessed strong interpersonal warmth and professional competence. In a relaxed and pleasant atmosphere, the two-hour interview passed swiftly. I shared and discussed the company's situation with her, specifically outlining the thoughts on corporate reform and development that had long taken shape in my mind. My objective was clear: to articulate my vision through their professional voice.

Following more than two months of diligent work by Qin Yan and her team, the first draft of the strategic development plan was completed. Spanning over a hundred pages, the document was printed by the office and submitted to me for an initial review.

I set aside time to thoroughly peruse the company's very first strategic development plan. A preliminary reading revealed that it had successfully captured my core ideas and intentions. When analyzed, depicted, and expressed through the professional terminology and analytical models of a specialized consulting firm, the outcome was even more satisfactory than I had anticipated.

Broadly speaking, the plan was divided into four main sections: analysis of the company's strategic environment, vision and objectives, strategic choices, and strategic implementation and safeguards.

In the section on strategic environment analysis, various analytical models and tools—such as the PEST model, the SWOT model, and Porter's Five Forces model—were employed to examine the company's macro and micro environments. It analyzed the macro factors encompassing politics, economy, and society, conducted detailed examinations of the industry, competitors, suppliers, and customers associated with the company, and provided a specific evaluation of the company's internal resources and capabilities.

Taking the SWOT model as an example, the analysis was structured as follows:

Strengths:
1. Rich historical foundation and accumulated operational experience in the chemical sector;
2. Strong industry position and market influence;
3. Excellent asset quality and financing capacity;
4. A high-caliber management team and a powerful leader;
5. A workforce rich in experience.

Weaknesses:
1. Lack of vitality within the institutional framework;
2. Aging equipment and production lines;
3. Aging personnel structure, insufficient talent reserves, a lack of incentive mechanisms, and inadequate employee enthusiasm;
4. A monolithic product structure and insufficient innovation.

Opportunities:
1. Strong governmental support;
2. A sizable market within the existing industrial chain, laying a solid foundation for transformation.

Threats:
1. A downturn in the industry itself;
2. Considerable environmental protection pressures;
3. The threat of production sites facing prohibitions against continuing chemical manufacturing activities.

Building upon this strategic analysis, the plan established the goals for the company's future development.

I. Overall Positioning
Striving to become a prominent, top-tier chemical enterprise in the western region and among the national leaders within three to five years, and evolving into a nationally renowned listed manufacturer of daily chemical products within five to ten years.

II. Specific Objectives
1. Achieve sales revenue exceeding 10 billion RMB within 3 years, 20 billion RMB within 5 years, and 50 billion RMB within 10 years.
2. Achieve profits exceeding 100 million RMB within 3 years, 200 million RMB within 5 years, and 500 million RMB within 10 years.
3. Enter the capital market and become a listed company within 5 to 8 years.
4. Ensure a steady increase in employee income, reaching the upper-middle level of the same industry within 5 years.

These targets were both inspiring and demanding. Yet, without a grand and definitive goal, it would be difficult to unite the team and drive everyone toward a shared objective.

In particular, the final target regarding employee income was something I had specifically requested be added. Its purpose was to ignite everyone's expectations and enthusiasm for the future, thereby forging a collective force to propel the company's development. As a leader, one's role is to use a magnificent vision and clear objectives to let people see hope, thereby inspiring their fighting spirit and drive. To put it more colloquially, every leader must know how to paint a grand picture of the future; how well one paints that picture is an important measure of a leader's capability.

As for entering the capital market to become a listed company, I had not considered it previously, because under current conditions, listing would be extremely difficult, nor was the necessity particularly urgent. However, Qin Yan analyzed that once the company transformed into a manufacturer of fast-moving consumer goods, it would not only meet the conditions for going public, but doing so would also bring tremendous benefits and advantages to the enterprise's corporate image and development.

Based on the strategic analysis, development strategies were also selected, with business-level strategies proposing several alternative paths:

1. Product Development Strategy
Building upon the existing foundation of chemical raw materials, newly develop and produce daily chemical raw materials to capture the chemical raw material market for daily products.

2. Market Development and Penetration Strategy
Introduce existing chemical raw material products into potential external markets that have not yet been entered, while further deepening market penetration within existing markets.

3. Backward Integration Strategy and Concentric Diversification Strategy
Once the production and sales system for daily chemical raw materials matures, venture into the direct manufacturing of daily chemical products and enter the consumer market for personal care products.

After reviewing the plan repeatedly, I felt a high degree of agreement with the strategic development plan compiled by Cargebet Consulting. Aside from a few minor details that still required refinement, the plan as a whole reflected the professional standards of a renowned international consulting firm. More importantly for me, it thoroughly embodied my own development philosophy and ideas, laying an excellent foundation for using a professional intermediary to make my concepts more readily accepted by others.

With a firm grasp of the plan in mind, I arranged for the office to convene an expanded meeting of the leadership team to conduct a preliminary discussion of the document. It was my habit to have important matters discussed at team meetings prior to submitting them to the board of directors; this approach gathered collective wisdom while projecting a democratic leadership style. On this occasion, to maximize the influence of the plan among the company's cadres and rank-and-file employees, I specifically expanded the list of attendees to include cadres at the deputy section chief level and above.