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Recently, many self-media have reported and commented on the stories of New Oriental’s Oriental Selection, which has frequently created miracles in fans over a period of time, under the title of “New Oriental’s live broadcast room is on fire” or “Dongfang Selection has exploded.” Their reports indirectly announced that the traditional education and training industry New Oriental is on the way to a successful transformation.
So, what kind of inspiration does New Oriental’s successful transformation bring to the downturn of the Chinese economy, especially the development of those private enterprises that are in a desperate situation?
First, enterprise transformation should fully combine its own resource endowment advantages, not everything from scratch.
Different from the traditional live broadcast industry, which mainly relies on the shouting of anchors and attracts customers with various price discounts, Dongfang selects bilingual knowledge to bring goods, allowing customers to study with notebooks while shopping, bringing customers a brand new shopping experience and The feeling has become a clear stream in the live broadcast industry. Relying on the free bilingual conversion of the human resource structure of New Oriental’s teaching staff and the resource endowment advantages of fluent communication and expression, New Oriental has done a good job of making a difference. This is the key to the successful transformation of New Oriental.
When it comes to resource endowment, we naturally think of the new structuralist economics advocated by Professor Justin Yifu Lin for many years. Mr. Lin advocated that the government should fully identify and utilize the resource endowment advantages of the region, and guide social resources to allocate resources through active industrial policies. The example of New Oriental’s transformation just shows that the most understanding of its own resource endowment advantages may not be the government that is likely to be successful, but also the government that may not act, or even act erratically, but the enterprise itself. In particular, facing the pressure of survival, they have stronger motivation and intrinsic incentives than the government to make use of the advantages of resource endowments to make transformation.
Second, on the road to successful transformation, we may expect the endorsement of the government’s industrial policy and the support of the government’s “supporting hand”, but what we can really rely on is the indomitable entrepreneurial spirit.
Like all enterprises in the teaching and auxiliary industry, New Oriental suffered a fatal blow under the impact of the double reduction policy. Among these companies, some choose to quit, some choose to start a second business, and more companies are waiting to see the adjustment of the government’s industrial policy. Faced with the realistic demands of transformation, we see that New Oriental is not responding to national industrial policies and transforming into projects with dual carbon or high-tech themes in order to obtain support from government funds. Its own endowment advantage has made a bloody way. Of course, in order to gain the support and trust of the government, some entrepreneurs who are in distress do not hesitate to do better than state-owned enterprises as private enterprises, which deserves pity and sympathy. Obviously, the transformation of New Oriental, which does not ask for others but only for itself, is more respectable.
For Yu Minhong, who has taken the college entrance examination three times, although he may not wish to fail, he is not afraid of failure. When he took the risk of being punished by Peking University, he founded New Oriental and stepped out of the system. In fact, Lao Yu had nowhere to go. Therefore, the self-improvement blood that has always flowed deep in Lao Yu’s heart always urged him not to be satisfied with the status quo, but to live in the moment. And behind this is precisely the entrepreneurial spirit that has been revived in China for thousands of years after more than 40 years of reform and opening up in China. Therefore, entrepreneurship is the most scarce resource in China today.
As corporate governance researchers, we can naturally interpret New Oriental’s behavior of donating desks to rural schools as the fulfillment of New Oriental’s social responsibility, and we can even lead Lao Yu to lead employees to start a new business, and it is an active practice of the stakeholder theory to be persistent with employees. Row. But you soon find out that in the face of New Oriental’s practice, which has become popular in recent years, what ESG (environmental society and governance) slogans and what stakeholder theories have made many scholars flock to will become very pale. To imitate a foul language that Lao Yu likes to say, he doesn’t care about these bullshit. However, during the transformation process of New Oriental, he started from the simple feelings of an entrepreneur, actively engaged in public welfare, and cared about the development of employees. He unintentionally fulfilled all these social responsibilities. Participating in the social division of labor in a natural way by creating profits may be the true meaning of entrepreneurship.
Of course, my emphasis here on the independence of New Oriental’s transformation does not mean that we do not need or encourage any possible support from the government. In the face of such active private enterprises, our government should be more proactive in improving the business environment, protecting private property rights, and establishing stable expectations. For example, in the face of the Chinese economy that continues to decline at the current stage, the role of real estate and new infrastructure in driving the economy may be very limited. What the government can do is to actively promote the resumption of listing of Ant, the leading company in the platform economy, and allow Didi to continue its overseas listing, so as to send a signal to the market that it recognizes the contribution and value of the platform economy, thereby driving the activity of private capital investment. . The activity of private capital investment may have a greater effect on the current downturn of China’s economy than real estate and new infrastructure.
The fact that New Oriental is independently on the road to successful transformation with its entrepreneurial spirit reminds us that we must see the resilience of Chinese private enterprises: they will be brilliant even if they are not given the sun. If we can give them some sunshine, why not give them some, or even more, sunshine? !
Third, unless a certain degree of administrative monopoly is formed, the transformation of a private enterprise that is forced to transform is always on the way.
Although New Oriental is on the road of successful transformation, it still faces many challenges on the road of future transformation. One is the risk of the government regulating the live broadcast industry. In the eyes of many people, the bilingual delivery of goods and knowledge delivery model pioneered by Dongfang Selection does not look like a class or sales. Some people may criticize, so are they teaching classes or selling goods? In the highly market-oriented live broadcast industry, New Oriental’s maverick will inevitably attract the envy, jealousy and hatred of other practitioners with serious introversion. The tax problems exposed by the live broadcast industry and the dissemination of vulgar content may become the pretext for relevant government departments to regulate the live broadcast industry at any time. Therefore, New Oriental, which is currently engaged in the live broadcast industry, cannot rule out the possibility of suffering a second blow in the name of regulating the development of the industry in the future.
Second, the sustainability of knowledge or bilingual delivery business models. Industry norms are certainly one of the risks faced by New Oriental’s transformation, but it may not be the biggest challenge faced by New Oriental’s transformation. In my opinion, the biggest challenge facing New Oriental’s transformation may come from knowledge or the sustainability of the bilingual delivery business model. New Oriental’s path to transformation success is largely due to the student network accumulated by New Oriental in the early days of teaching assistants. The teacher who used to teach interesting and interesting lectures is no longer in class, and has changed his career to do live broadcasts. Then I will see how his/her live broadcasts are doing. Many students and their parents entered the live broadcast room of Dongfang Selection with such a mentality. But after I learned “Steak” and even learned the English of all the products recommended by New Oriental, is there any incentive for me to continue watching the live broadcast?
The transformation 2.0 plan I thought of for Lao Yu here is that New Oriental returns to the education bank from live broadcast, but the teaching targets are live broadcast anchors with strong demand and sufficient cash flow, but their business capabilities need to be improved urgently. Live broadcast anchor education will become a unique business model formed by New Oriental combining its own advantages in education and live broadcast resources. Lao Yu, who is well versed in the law of education demand and the source of cash flow for industrial development, will not fail to understand this truth. But I still hope that Lao Yu won’t tell me the next time he sees me, he has already thought of this trick and is implementing it.
Third, the design of incentive contracts between New Oriental and live broadcast stars. Some scholars also took Li Ziqi’s equity dispute as an example to express concerns about the incentive tiered design of New Oriental’s live broadcast stars. I’m not too worried about this. The reason is that the streamer’s traffic is verifiable, and the streamer’s income is OK as long as it is simply linked to the traffic. A celebrity anchor with high traffic earns more income than an anchor with lower traffic and will not cause dissatisfaction among team members. Doing so can naturally mobilize the enthusiasm of all anchors and retain those excellent anchors. This is sometimes easier than designing compensation incentive contracts around unverifiable, or even unobservable, efforts for most industries.
Of course, in the face of the above-mentioned challenges on the way to transformation, I always believe that Lao Yu will always come up with a way to see the tricks and solve them one by one, just like he solved the impact of the double reduction policy of the teaching and auxiliary industry by entering the live broadcast industry. This is not because I believe how smart Lao Yu, who took the exam three times, was admitted to Peking University, but I saw the indomitable, maverick entrepreneurial spirit with Peking University temperament in him.
(This article only represents the author’s point of view. Responsible editor email: [email protected])