Looking back at the development history of 50 years of continuous growth manufacturing enterprises we have studied, we find that they are like gradually evolving species, undergoing a series of changes and adjustments, similar to the process of branching and pruning of plants. Just like adding new branches to a tree every spring (cross-cycle competition), these companies are constantly adding new business and pruning dead branches and parts that affect overall competitiveness. After years of hard work, you will see the fruits of their thriving, lush foliage.
Johnson & Johnson has had almost no loss-making years in its 100-year history, but it has also experienced some unexpected results and frequent failed attempts in the process of development. We cannot expect all products to be successful. Some products may seem to have failed, but they have brought new vitality to the enterprise and changed the rigid state of the original business. Some new products even redefine the brand, as Ralph S. Larson, who served as CEO from 1989 to 2002, said: "Growing is like a gambler's game." No one can wait for the sky to fall cake!
As early as the beginning of the last century, 3M was a company that started with a major failure. After being hit hard by an accident in 1904 mining a carborundum mine, the small company tried to find any viable way out. Finally, in desperation, 3M took an investor's advice: Ditch mining and focus on making sandpaper and grinding wheels. This decision saved the company.
In addition to the sandpaper business, 3M's first attempt at change was to highlight car wax and polish products, but it was a costly mistake. However, a second attempt at entering a new line of business was a huge success - Scotch Scotch Tape.
The world is full of accidents and changes, just as no parent can predict the trajectory of a child's life. Many organisms have not evolved in some planned or envisioned way. The evolution of the world is full of surprises and mutations.
Norton was a "category-setting" company, and it was profitable from the start. In 1914, Norton was 10 times the size of 3M and far more profitable than the struggling 3M, making it the undisputed leader in the grinding industry.
Like other companies founded by "category setting", Norton set out from the beginning and persisted to be the leader in its field. Norton has always focused on the field of abrasive products, and this focus has brought a huge competitive advantage. However, many of the leading manufacturing companies throughout history have failed precisely because they were entrenched in specific categories. In 1948, 3M had achieved diversified development, with 7 different product divisions, and abrasive products accounted for less than 30% of the company's revenue, while almost 100% of Norton's revenue still came from abrasive products.
Over time, 3M moved ahead of Norton. Entering the late 1950s, Norton also hoped to learn from 3M, but the companies created by "category setting" were often difficult to accept changes and new possibilities. They tend to plan and calculate everything too much and end up stuck in their comfort zone.
In mainland China, there are many instant noodle companies competing fiercely, but in the end Jinmailang and Baixiang emerged as two giants. However, in the past 10 years, we have seen Jinmailang more like 3M and Baixiang more like Norton. For Jinmailang, instant noodles only account for less than 50% of the company's revenue, while Baixiang still mainly relies on the instant noodle business. However, this does not mean that Baixiang has stronger competitiveness. On the contrary, Jinmailang has gradually occupied a dominant position in the instant noodle market and has become the most competitive brand in mainland China.
Of course, not all businesses need to be living fossils like giant pandas. Even if it becomes a living fossil, it is only a small part of the business. Most manufacturing companies that have grown continuously for 50 years are gradually evolving species. They continue to break through the "category setting", and keeping pace with the times is the real reason for their continuous growth. Enterprises such as IBM, Nestlé, Toyota, BMW, and 3M are themselves gradually evolving species, and they are no longer what they were originally. These enterprises have achieved continuous growth by continuously innovating and adapting to the survival advantages of different times.
To sum up, none of the manufacturing companies that have grown continuously for 50 years is a living fossil. They are all corporate species that have gradually evolved one after another.
This article is excerpted from "Chain Master Brand: The Best Growth Strategy for Manufacturing Enterprises"
The white paper "Chain Master Brand: Optimal Growth Strategy for Manufacturing Enterprises" will be officially released in early June!