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This article is from the WeChat official account:Chaos University (ID: hundun-university)According to Li Shanyou’s lecture notes in February 2020, the author: Li Shanyou (founder of Chaos University), the original title: "You attack to the death, but you can’t fight a department of giants? After Wang Xing cut three knives… | Classic Good Lesson", the header picture comes from: Screenshot of "Flowing Golden Years"

Many start-up company owners like to put the phrase "nothing unexpected, only impossible" on the wall, thinking that as long as you have a great dream, you will be able to achieve it.

But we often overlook that starting a business is for survival, not to die in competition. Competition is just a part of entrepreneurship, and there is no need to force yourself to attack the giants head-on unless it is a last resort.

In the competition, how to use the weak to overcome the strong is the first proposition for everyone. So, how to solve the problem?

In fact, God has left a "back door" for entrepreneurs

Take the horizontal axis as the market and the vertical axis as the technology to draw a simpleValue network model:

There is no doubt that incumbent companies often occupy the best technology, the best customers, and stand in the most dazzling value network – this is the mainstream market. The marginal value network composed of edge markets and edge technologies is often ignored by everyone.

Imagine you are a start-up, into such an existing competition landscape, will choose the mainstream value network, or the edge value network?

In real life, the vast majority of entrepreneurs will enter the mainstream value network market because it looks the most fertile and the least risky. But in fact, the emerging marginal value network is the best window of opportunity for entrepreneurs.

To follow or to destroy?

Going back to the value network model just now, if you choose the mainstream value network, you obviously adopt a follow-along strategy, thinking that you are more courageous than the giants of the mainstream market. If you choose the emerging value network, you adopt a strategy of disruptive innovation.

A common saying is that entrepreneurs feel they are more productive and have better values, so they can win by putting their lives on the line to compete with a division of a large company.

However, if you go outside Alibaba and Tencent buildings at 2 a.m., you will find that these giant companies are still shining brightly at night, with amazing combat effectiveness and efficiency.

So, don’t think it’s good to be diligent. Many times, we are very diligent just to cover up our laziness in thinking. As Wang Xing said, most people are willing to do anything to avoid thinking.

What are the differences between the two strategies?

In "The Innovator’s Dilemma," Christensen studied the 20-year history of disk drives and statistically said,If you compete head-on with the giants, the success rate is only 6%. If you are the first to enter an emerging value net and adopt a disruptive innovation competitive strategy, the success rate will be as high as 37%, a six-fold difference.

So we say,The first law of entrepreneurship is better than better.This is the simplest and most direct explanation of the thinking model of dislocation competition.

There is a line in Good Strategy, Bad Strategy: "For a start-up, it’s not that you don’t have a chance. You have to find areas where your strengths and weaknesses are avoided. Make your strengths longer and your weaknesses less important." This is misplaced competition.

Meituan: Specializing in "chicken ribs", leaving the fat for BAT

Meituan did group buying in the early days, when the first giant in the field of e-commerce was Ali. When I studied the Meituan case, I was very shocked that the first consideration of Wang Xing’s entrepreneurship in 2010 was how to compete with Ali.

He has successively proposed two theories of dislocation competition:

Four vertical and three horizontal

Wang Xing said that there are four areas in the Internet: information, communication, entertainment, and business.

In the Web 1.0 search era, there are giants in these fields, such as Baidu in information, Tencent in communication, Shanda in entertainment, and Alibaba in business. Therefore, he must go to the Web 2.0 era to find opportunities.

In the era of Web 2.0 social media, the giants in the information field include Sina Weibo, Renren in communication, and Kaixin001.com in entertainment. Is there any opportunity in business? Therefore, in this field, he made Meituan group buying against Ali, which is the positioning of 2010.

AB classification

In competition, we often have the illusion that the giants stand in front of us like mountains, so that you see the ecosystem where the giants are located as all possibilities. In fact, this is a huge illusion.

For example, most e-commerce companies are eyeing Ali to compete. But Meituan put forward a theory called AB classification:

First of all, based on whether supply and performance are online, we make a cross-cutting knife. Supply and performance are Tencent (Category A) online, and Ali is offline(Category B)…

In category B, there is a more beautiful second knife: Ali is a physical e-commerce, and there is another possibility besides physical e-commerce that is a life service e-commerce. For example, takeaway is a life service e-commerce, and selling books, home appliances, and clothes is a physical e-commerce.

This knife is very beautiful. Most people limit e-commerce to the field of physical goods because Ali has done physical e-commerce. But Meituan cut this second knife, allowing you to see a completely different world.

In life service e-commerce, there is also a third knife: off-site life service e-commerce and local life service e-commerce.

Wang Xing’s analysis is very interesting, saying why do life service e-commerce instead of physical e-commerce? Because if you compete directly with Ali’s Juhuasuan, you have to have logistics, which is a very high cost for the start-up company.

Second, life service e-commerce is a non-standard product, a dirty and messy hard work, with low gross profit, so giants often disdain to do it. Meituan Wang Huiwen said:

"We have fallen in love with low-value things. How can BAT be interested in something that is not very profitable, difficult and slow. We specialize in chicken ribs and leave fat to BAT."

Looking back, what are the choices of other group buying websites at the same time? In 2010 and 2011, 58% of companies chose physical e-commerce. They were not killed by Meituan, but by Ali Juhuasuan.

In 16 years, Caijing interviewed Wang Xingshi and asked: Did the emergence of Meituan and Didi bring changes to the original BAT-led Internet order?

Wang Xing said: The law of competition in the Internet field has not fundamentally changed. It is not to squeeze out the original people in the original field, but to expand the new battlefield, and new players occupy the new battlefield. Innovation is always on the edge.

Wang Xing’s words are very wonderful. This is the power of the marginal value network.Innovation is always on the periphery.If you can’t see perfection, it’s because you’re too close to the picture.

Theory, is it really useful? "After being killed by the giant, I was reborn in a dislocation"

Many people ask me, Professor, Meituan is a successful giant, so is dislocation competition useful for small businesses? Is it useful for entrepreneurs?

Here, I would like to proudly invite a classmate to tell my story. Her name is Sister Deng, and she has used this theory to lead her company out of weakness and rebirth.

In 2010, I founded ROYMAX.(Wimes)LED company, launched a patented product, Apollo(LED three-sided luminous candle light), the turnover of single products reached 10 million.

But soon, the giant entered the market and beat our 68 yuan product with a 9.9 yuan congeneric product, causing our sales to plummet by 70% and being crushed by the giant.

Almost overnight, my ten-year savings were wiped out. Why is it that I am obviously different, but still being crushed by the giants?

On an occasional occasion, I learned the theory of "misplaced competition" and understood: "The difference is the difference between different value networks. The difference between the same value network is only better.

So, we started again, re-analyzed the market, positioned ourselves, and did succulent plant lighting and Jedi rebirth. How did you do it?

rough cut market

First look at the LED category map, divided into general lighting, medical lighting, agricultural lighting, and special lighting.

At that time, general lighting was already a red ocean market. Medical lighting was all for hospitals, and we couldn’t reach it in terms of professional technology. Special lighting refers to the aviation, aerospace, and marine fields, and it was difficult for us to enter the market. But there is still one area left, and we seem to have a chance – agricultural lighting.

Slice niche

Then we can divide the agricultural planting lights into breeding lighting and planting lighting. Aquaculture lighting because I was not familiar with it at the time, I couldn’t do it.

Planting lighting giants mainly serve B-end users, and Philips has launched a comprehensive solution that has eaten up this market.　

It can be seen that the opportunity can only be found at the C end. The C end requires flower and fruit lighting and succulent lighting. Because of the wide variety of colors, flowers need to be matched by many different spectra. At that time, our resources were insufficient, so we had to give up.

The pain point of succulent plants is the slow growth cycle and single color, which can be satisfied by our products. And in this field, compared with giants, as a start-up company, we have structural advantages: flexible market, online and offline simultaneous operation; startups with few personnel and efficient organization; product iteration speed is very fast.　

Through layers of analysis, we finally found the edge industry that this giant could not see, see, or do – succulent lighting, competing in a dislocation.

In the end, we occupied 60% of the market share, and the 18-year turnover exceeded 50 million, becoming a leading enterprise in the field of Taobao and Tmall horticultural lighting.

This is the power of the theory of misplaced competition, and by applying it, I can make change happen in the present moment.

Summary: Better than better, better than different

In an environment where leading companies have established a dominant advantage, any me too product will be reduced to chicken ribs. Don’t exaggerate your execution, don’t exaggerate your efforts, and don’t exaggerate your efficiency. The efforts and efficiency of today’s giants are much greater than ours, which is unimaginable.

Therefore, entrepreneurs need to keep in mind the misplaced competition model of "better than different".

The dislocation competition is not to be weak, but to make the chessboard bigger. To make the chessboard bigger, not in the same plane, but after the breakdown, it becomes a higher dimension and becomes bigger in a higher dimension.