innovation institute-model lesson 15 | fractal innovation: how can old products grow new life? ?

Innovation College-Case Lesson 15 | Fractal Innovation of Xiaomi Ecological Chain

Fractal refers to the self-similarity of the same thing at different scales.

The first curve is composed of smaller sub-curves; When the external environment changes through natural selection, a sub-curve may grow into an independent second curve. This process is fractal innovation.

1. When an enterprise grows, it will definitely encounter a limit point, and it is necessary to open the second curve before reaching the limit point. And fractal innovation is "the second curve that grows out".

that is, "innovation+choice = the second curve". ?

a little more detailed: heredity+mutation+selection+isolation = second curve.

2. Fractal innovation is the best algorithm to cross the discontinuity gap and the best innovation strategy for mature companies to start the second curve.

"fractal innovation" is the first principle to form the second curve

3. Biological isomorphism Corporate governance

Biology: heredity+variation (natural selection) = new species

Corporate governance: management+innovation (market selection) = second curve

Fractal innovation is to break the binary opposition

4. Fractal innovation (first

the second curve of fractal innovation grows from the first curve, and it is a sub-curve of the first curve before the breaking point. The continuous development is to help consolidate the first curve.

5. The core algorithm of fractal innovation:

z? z2+c （? Self-referential)

The previous calculation result (output) is the starting point (input) of the next calculation, which can be iterated endlessly (compound interest effect); Each calculation iteration is isomorphic and self-similar.

"z" is hereditary; "c" is variation; “? Self-referential "refers to self-iteration and iteration speed

6. There is no leap from isomorphism in nature to innovation

1) Biological evolution

The evolution of species is the result of natural selection, and the evolution process is slow and stable.

A sufficient number of mutations provides material for natural selection, which is one of the cornerstones of natural selection.

Mutation and evolution need many generations to change, and the speed of self-iteration is very important to the evolution process.

2) enterprise innovation

enterprise discontinuous innovation is the second curve of the first curve transformation and the result of market selection, and the innovation process needs intergenerational iteration.

The application of evolutionary theory in enterprises requires rich sources of innovation, diversity and marginal innovation.

In a limited enterprise life cycle, the iteration speed of innovation is intuitive and important.

The essence of the model is the algorithm methodology to guide the transformation from the first curve to the second curve. Under the basic application and discontinuous innovation scenarios:

the methodology of the core algorithm of the second curve in personal workplace

the methodology of the core algorithm of the second curve in mature enterprises

the five-step method of fractal innovation

(1) Timing:

The best time for fractal innovation is when the first curve is broken.

(2) Carding ability:

Looking inward, there are sub-businesses in the core competence and the first curve. Carding ability should conform to the law of "ability circle" (3b: build, Buy, Borrow can be used to expand the ability circle).

(3) Matching demand:

Look outward, look at the market demand, and see if it can match the existing sub-business and core competence. PEST model and five forces model can be used.

(4) Isolation test:

Independent small organization, initial resource allocation and MVP test.

(5) Single-point breaking:

Find a single factor with ten times the speed, All in resources and breakdown threshold.

The case of a second understanding of common sense of life-the sea case line, looks like a sawtooth from a large scale. If you cut a small piece of it and zoom in, it will still look like a sawtooth on a large scale. If you zoom out, the result will still be the same.

Business category-Meituan case-fractal of group buying curve to take-out

1. Background of Meituan case-fractal analysis of group buying curve

Meituan was founded in the group buying dispute in March 2111, and finally won in the Thousand Regiments War;

In October, 2113, it launched the Meituan takeaway and entered the takeaway market. In October 2115, it merged with the public comment to become a life service e-commerce platform;

By the end of 2118, Meituan had occupied 63% of the take-away market in China, with a revenue of about 65.2 billion yuan. Internet-specific indicators such as the total number of platform transactions, the total number of annual trading users, and the average number of educational books for users all maintained a strong growth trend.

2. Step analysis

(1) Timing:

The best time for fractal innovation is when the breaking point of the first curve has passed and the limit point has not yet reached the growth inflection point.

meituan. com's sales in July 2112 exceeded 511 million yuan, and local service sales accounted for 95.14% of the total sales. Then start the small S fractal business of the first curve of group buying: wine travel, take-away, movie tickets, etc.

This stage belongs to the point that the first curve has passed the breaking point, but it has passed the inflection point for the group buying business, which is an ideal time to start fractal.

(2) Carding ability:

Looking inward, there are sub-businesses in the core competence and the first curve. Carding ability should conform to the law of "ability circle" (3b: build, Buy, Borrow can be used to expand the ability circle).

1) Core competence of group buying business: integrate and serve "offline merchants serving local life" and provide offline merchants with value services that are drained to stores online

Meituan Wang Xing chose offline "local life group buying" at the beginning of its establishment, and took local merchants as the first service object as a platform, and obtained the resources of offline merchants serving local life in the development of group buying

2) Capability circle required by take-out platform. Online client drainage purchase+ability 3? Food and beverage distribution service

Meituan Group has acquired capabilities 1 and 2, and capability 3, food and beverage distribution, is a capability circle that needs to be expanded

3, Meituan has expanded its "food and beverage distribution" capability circle by self-organizing a distribution team and a distribution information system

(3) Matching demand:

Looking outward, looking at market demand and seeing whether it can match the existing sub-business and core competence, PEST model and five forces model can be used.

1) PEST Analysis in 2113

Politics p: Urbanization

Economy e: Consumption Upgrade

People in S: Z era enter universities

Technology t: Mobile Internet

2) The overall urbanization of China is accelerating, and the middle class of Chinese people increase their demand for strong consumption upgrade; The people in the Z era are more willing to pay for the experience when they enter the university and have the spending power and Internet aborigines. At the same time, after the popularization of mobile Internet, smart phones and online payment, the take-away demand market is a vast emerging market.

(4) Isolation test:

Independent small organization, initial resource allocation and MVP test.

From October, 2113 to 2114, the independent take-out team of Meituan passed the university market and completed the test and verification.

(5) Single-point breaking:

Find a single factor with ten times the speed, All in resources and breakdown threshold.

in the first half of 2115, the US Mission's take-out investment in heavy resources began to officially enter the white-collar market, breaking through the breaking point.

3. Fractal summary

(1) Innovation of each sub-curve of the first curve? z? z2+c （? Self-referential)

1)Z= "arrive at the store"

integrate and serve "offline merchants of local life service", Provide offline merchants with online value service

2)C= "fast delivery"

deliver local merchants' catering to users quickly and on time

(2) market environment and scene at that time

young urban users have a demand for take-away food with convenient, fast and diversified choices

(3) the second curve is broken

in October 2113.

in the first half of 2115, the US Mission's take-out investment in heavy resources began to officially enter the white-collar market, breaking through the breaking point.

1. Theoretical origin

Formula of the classic pattern of Mandelberg Collection (nonlinear iterative feedback formula)

z? z2+c （? Self-referential)

2. Theoretical origin

Biological evolution theory: a species receives natural selection under heredity+variation, forming a new species

3. It is implied that

the first curve and the second curve must be self-similar, and this gene is similar; However, the elements of variation are bound to have a strong correlation with the current environmental changes, and the essence of self-referential iteration is to be chosen by the market for survival rather than seeking truth, so iteration is faster than perfection.

The essence of the model is the algorithm methodology that guides the transformation from the first curve to the second curve, and it is basically applied in discontinuous innovation scenarios.

1. When there is no similar genetic element correlation between the first curve and the second curve, or the variation element has no strong correlation with the current environmental change, the algorithm is invalid;

2. If the first curve does not have enough diversity of continuous innovation, the algorithm is invalid.

1. The second curve gene of fractal propagation will not remain unchanged after many times of fractal, but will evolve and expand the ability circle with the continuous fractal; If it is completely fixed, we should be wary of the effectiveness of the second curve of fractal innovation.

2. During discontinuous propagation, if the iteration speed is not fast enough, the MVP may fail to complete the verification quickly, and the algorithm may fail in a high probability.

3. After the breaking point of fractal innovation, it needs to be isolated in time (institutional or physical isolation) to consolidate resources and promote the growth of the second curve.

4. To start fractal innovation, the best time is the regional position of the first curve between the inflection point (which has broken the local point, but the growth rate has slowed down) and the limit point, when there is a certain redundancy in finance and resources.