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Industry watch: Dual transformation, dual-track development of new and old businesses

Colley Hwang, DIGITIMES, Taipei 0

Credit: DIGITIMES

With the change of the industrial environment, the business strategies of enterprises must keep pace with the times. For about 20 years since the mid-1980s of the PC-led industry era, iconic brands had the final say. Taiwan manufacturing plants were moved to China, and local governments were wooing foreign investments. Manufacturers scrambled for orders to keep production capacity fully utilized, and makers strived to increase economies of scale - these were variables in market competition. Iconic brand vendors even introduced the "online bidding" model, uplifting the notebook industry with an annual demand of 200 million units. It was a rat race at this stage, when Taiwanese makers were fighting to survive, and Japanese and Korean manufacturers suffered heavy defeats. It was clear who would remain after the successive withdrawals of IBM, Texas Instruments (TI), LG, and Toshiba.

The mobile phone market was emerging around 2000, but only gained real momentum in 2007 when Apple launched the iPhone. Two-way interaction devices were becoming a platform to create Internet traffic. China made all-out efforts nourishing local industries with its domestic market and national policies. No other brands are able to compete head to head with Chinese mobile phone brands except Apples and Samsung. Even if Taiwanese brands seek to tap in the phone market, they are unable to sustain long. I am afraid that it is difficult for them to respond to changes of the macro environment if they insist on implementing various KPIs.

In the 2020s, we have entered the era of Internet of Things (IoT) with diversified and infinite changes that create innovative demands. The product-driven market has been switched to the application-driven market. The focus of business rules of enterprises has diverted from economies of scale to a new era of diversified development and co-opetition. The ability to identify the right market segment and professional business opportunities has become the new key to success. Therefore, optimizing the operation system and product transformation are all indispensable business initiatives. The value of traditional product brands is declining. Adhering to the traditional evaluation model of KPI results will inevitably incur misinterpretation of time, space and resource misplacement.

Enterprises usually have had to allocate resources under an unfamiliar environment since 2020. The front-line managers particularly are obliged to pinpoint the business opportunities of the target market, delegation, customer co-creation and value added. Apart from defining the KPIs, they need to know how to formulate their KMI (key milestone indicators).

Acer founder Stan Shih said that Taiwan does not lack talent, but lacks a stage. Taiwan is well experienced in terminal equipment industry from which entrepreneurs may cut into more opportunities by leveraging the resources of Taiwan's industry. Taiwan has vaster experience engaging with the market than the other countries. What it takes now is a mind switch along with a determination to redefine their business model and focus.

"Timing" intrinsically involves creating as well as riding the wave. Many believe as long as you are able to start a business, it will succeed. But that is only an entrepreneurial myth. Without enough funds, entrepreneurs tend to pour their best manpower into wrong market segments leading to inefficient resource allocation and loss of opportunities for growth. The management team must mull over the business operation of "separation of ownership and management" in the inception, including preferred stocks which come with no voting rights, employee stock ownership plans, etc, which are the keys to sustaining the long-term operation of the enterprise.

There leaves no place for repentance when the efforts are tantamount to "nothing but fame" as a result of unpreparedness.

There is no eternal winning formula for business operation. You need to keep tansforming or you'll be replaced, says Shih.

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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