Reflection on how construction machinery enterprises can achieve sustainable growth

Growth is an eternal theme for a company, either not advancing or retreating.

If you are the chairman of a listed company, if the company's performance cannot achieve growth, the stock will fall, and the company that cannot grow will not be interested. Investors may exert pressure to make you leave. Investors expect the company's revenue, profits, and stock returns to grow by more than twice the market average, otherwise you are not a qualified chairman.

Unfortunately, not every company can achieve growth. In recent years, people have seen a phenomenon: when the market grows, almost every company in the industry's revenue is increasing; But when the market declines, no company can go against the trend and achieve a growth in revenue and profits. Due to market fluctuations, achieving sustainable profit growth is even more difficult.

Nowadays, the growth of many enterprises is facing enormous challenges that are difficult to sustain.

There are two main reasons for the growth of enterprise performance:

Market size increase: Just like the development of the industry in previous years, with the growth of national infrastructure and real estate, the demand for construction machinery and equipment in the market is increasing significantly every year, and many enterprises have achieved significant growth;

Market share increase: Although the market size has not increased or even decreased, more customers have chosen this company's products.

Customers are the most relevant key variable for business growth, and an increase in the total number of customers, or an increase in the number of customers choosing the brand, can help businesses achieve growth. From this perspective, customers are truly the parents of the company's food and clothing.

How can we make more customers choose your brand? There are three main ways here

Continuously investing in research and development to enhance product competitiveness and meet more customer needs;

Heavy investment in advertising and marketing activities, building a brand, and attracting more customers through price reductions, free accessories, and services;

Continuously improving services to enhance customer loyalty, forming a good reputation and bringing more customers.

The product homogenization of Chinese enterprises is severe, and it is not easy to invest in research and development to create a competitive advantage in products; Market marketing and advertising, especially marketing policies related to price wars, have made many companies tirelessly pursue them, but their effectiveness is becoming weaker and weaker. The cost of acquiring customers continues to rise, and the risk of new customers is higher; Enhancing customer loyalty is a sustainable profit growth model that aims to attract more customers through repeat purchases from existing customers, increasing wallet share, and word-of-mouth recommendations.

Most companies have chosen the second approach, which, although effective, is unfortunately not a sustainable growth model.

In 1970, Milton Friedman introduced shareholder supremacy, which means that the mission of a company is to maximize shareholder value; In 2010, Roger Martin proposed "user capitalism", where companies that prioritize creating value for customers can create greater value for shareholders. In August 2019, the Business Roundtable representing the largest company in the United States issued a statement placing the goal of providing value to customers on an equal footing with creating shareholder value.

Few Chinese companies regard helping customers make money as their mission and strive to achieve it. They always try their best to increase their profits, withhold employee salaries, and increase product profits. So now it's becoming increasingly difficult for customers to make money, and the customer churn rate is high. Only a small proportion of customers will insist on choosing a certain brand.

Just as people think about the meaning of being alive, businesses must also think about what they do for. For profit? For the maximization of shareholder interests? For the welfare of employees? Or is it for the sake of maximizing customer benefits? I have seen the missions and visions of various companies, but I rarely see companies that prioritize "creating maximum value for customers".

People have become accustomed to evaluating a person's success based on income, wealth, and status. They often use financial data such as the size and profit of a company to evaluate its success, and use this as a goal to plan, market, and make decisions for the company. This has led many people to firmly believe that making money is the purpose of doing business (and also living), even though they speak tall and fancy words.

Sorry, making money is not the goal, it's just the result. The sole purpose of business operation should be to create a more meaningful life and a better world by serving customers, making them feel happy and making their lives better.

Without giving, where will one reap? Without creating value, how can there be sustainable growth? So every company must think about how to create value for their stakeholders - customers, employees, suppliers, agents, investors, communities, environment, and society - and benefit them. The companies in the United States that lead in customer loyalty and their shareholder returns far exceed the stock average index.

A company that only thinks about deceiving customers, employees, and investors, squeezing suppliers and agents, can never build a great enterprise.