Transformations and adaptations within companies have always been one of the greatest challenges faced by the global business communityThroughout various industrial revolutions, only a select few organizations have successfully navigated these changes, while most others have perished due to their failure to adaptReflecting on pivotal shifts, such as the transition from feature phones to smartphones, film cameras to digital cameras, and from gasoline-powered vehicles to electric cars, it becomes clear that the reasons behind the failure of many companies in these transitions often lie not in their strategic vision but in the absence of an organizational culture, structure, leadership, and agile decision-making processes that can support new business initiativesAs the renowned management expert Alfred Chandler once articulated, “structure follows strategy,” implying that the success or failure of a company is determined by its ability to align its organizational structure with its strategic intentions.

Currently, the retail sector in China is undergoing a comprehensive transformation driven by omnichannel operations

Businesses are being urged to shift away from traditional models focused on products or physical spaces to those that place people at the core of their business strategiesThis omnichannel approach has generated numerous emerging business formats and customer engagement scenarios, ultimately leading to fresh avenues for growthHowever, it has also introduced a series of challengesA recent report published by Tencent, titled “Insights on Organizational Capability and Talent in Omnichannel Operations,” revealed that retail enterprises are grappling with common issues as they strive to implement omnichannel strategiesThese include challenges related to strategic focus, data integration, collaboration of interests, and a shortage of skilled talentThe misalignment of organizational structures and capabilities has become a significant barrier to the effective implementation of omnichannel operations.

Amidst this backdrop, Tencent recently organized a roundtable discussion titled “High-Level Dialogue on Omnichannel Organizational Strategy and Talent,” featuring insights from key industry figures, including Gan Quan, General Manager of Talent and Culture at Chow Tai Fook, and Chen Shuanghua, General Manager of Human Resources at Tencent Cloud and Smart Industries Group

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The dialogue revolved around the pivotal question of how to cultivate high-performing organizations in the face of transformation.

Chow Tai Fook stands as a leader in the Chinese jewelry industry, while Tencent is a powerhouse in the digital landscape of ChinaBoth companies possess rich histories of navigating transformative changesThe expertise shared by Gan and Chen not only stems from their academic knowledge but is also deeply rooted in their hands-on experiences with significant organizational reformsTheir insights on leading organizational transformation provided valuable practical guidance for those navigating similar challenges.

Analyzing lengthy research conducted by Li Shi Business Review, it has been noted that while the reasons for failures among struggling companies are varied, the elements contributing to the success of thriving companies tend to be remarkably similar

During the recent dialogue, both Gan and Chen emphasized the critical nature of organizational issues amidst transformationTheir discussion centered around five key themes: “timing of change,” “consensus for change,” “organizational efficiency,” “talent selection and development,” and “digital empowerment.” Together, these themes weave a complex tapestry that depicts the landscape of organizational transformation.

These five concepts are interrelated, creating a cohesive internal logicTo distill it into a single essence, it highlights the necessity for companies to initiate proactive transformations at the appropriate time, cultivate consensus around transformative directions within their organizations, prioritize strategic talent development, improve organizational efficiency through cultural, structural, and process enhancements, and leverage digital technologies to empower talent development and operational efficiency

Ultimately, this approach seeks to achieve strategic objectives that enable organizations to transcend cycles of growth and decline.

The first key theme is “timing of change.”

This discussion highlights a crucial insight: many transformations occur only when a company’s performance begins to falter, leading to an uphill battle in their transformationsGan posited that the optimal moment for transformation is while the company is still in an upward trajectory, rather than waiting for signs of declineThis proactive approach allows organizations to capitalize on their higher tolerance for risk, elevated morale, and capability for long-term strategic thinking, facilitating smoother transitionsBy contrast, organizations in decline often succumb to short-sighted strategies driven by low morale, diminishing their capacity for necessary, substantive change.

An illustrative case study is that of Chow Tai Fook, a company which has been in operation for 95 years and has more than two decades of experience in the Chinese mainland market, with nearly 90% of its business concentrated there

In the wake of recent market shifts, Chow Tai Fook has consciously chosen to embrace a strategic transformation themed “One Goal, One Team.” This initiative transitions the company from a compartmentalized management approach to one encompassing various regions within China and abroad, aimed at achieving a more integrated operation with collective objectives.

Chen of Tencent CSIG reinforced this notion by emphasizing that the essence of organizational change lies in enhancing productivity within a new market context and adjusting production relationships to boost efficiency and ensure a return on long-term investmentsHe argued that when selecting the timing for organizational change, leaders must pay close attention to both external market dynamics and internal productivity indicatorsThis involves a nuanced understanding of whether market demands have shifted and whether internal relations support or hinder operational efficiency.

Having identified external and internal readiness for change, organizations must proactively engage in transformational initiatives

Chen remarked, “When a company initiates change while performance is still rising, it will experience a much stronger sense of confidence and control.” This mindset is crucial for successful transformations.

The second key aspect is “consensus for change.”

Unlike individual transformations, organizations comprise a multitude of varied perspectives, values, and interestsIf stakeholders within an organization cannot reach consensus on the direction or pathway for the transformation, they will encounter substantial obstaclesTherefore, successful organizational transformation must foster a unified determination on both the trajectory and the strategies involved in the change process.

Gan highlighted that at Chow Tai Fook, substantial effort and time have been dedicated to cultivating such consensus among core management, focusing on foundational discussions about whether adjustments are necessary, and if so, deciding the future direction and priorities

"All of these require consensus," he statedChen concurred, indicating that nearly all transformations are faced with challenges, and establishing a shared understanding is vital for resolutely executing the agreed-upon changes.

One relevant case that exemplifies this consensus is Tencent’s transformation of its industrial internet frameworkBy centralizing its various To B operations under the CSIG umbrella and re-allocating responsibilities among core employees, the company required these employees to agree on the need for transformation to facilitate successTencent's culture, which encourages inclusivity and open communication, led to extensive discussions among executive teams and facilitated multiple rounds of dialogue with staff at all levels, which helped build this consensus ahead of the formal announcement and subsequent implementation of changes.

The third theme is “organizational efficiency.”

There exists a prevalent misconception that the efficiency of an organization hinges solely on employee dedication and engagement

However, these are merely outcomes of organizational efficiency, rather than its foundationsGan and Chen contend that the core drivers of organizational efficiency are rooted in the elements of culture, structure, and processes.

Starting with organizational culture, it serves as the fundamental guiding principle by which a company conducts its business interventionsA robust culture can foster positive motivation, leading to enhanced efficiencies, while a detrimental culture generates negative motivation that constrains effectivenessFor instance, “customer-centricity” is one of Tencent’s cornerstone cultural principlesWhen this principle permeates the organization, it becomes an ingrained aspect of employees’ mindsets, compelling all levels within the company to prioritize authentic user feedback.

Subsequently, organizational structure plays a crucial role in efficiency

It encompasses how tasks are divided, grouped, and coordinated across teamsIn Chow Tai Fook’s restructuring within China, a significant adjustment involved consolidating its ten operational regions into four major areas.

Gan explained, “This restructuring has enabled each region to manage its operations more effectively, allowing us to achieve better management with equal or lesser resources.” This initiative also respects the unique differences across regions while redistributing core functions from headquarters to new regional collectives, infusing them with greater flexibility and expanded responsibilities to enhance operational efficiency.

Chen also proposed two guiding principles for effective organizational structure design: the first is to maintain a user-centered perspective, ensuring that interface designs resonate rationally with usersThe second principle advocates for reducing hierarchical levels; the more layers present, the more efficiency diminishes, thus opting for flatter organizational structures facilitates communication.

In terms of organizational processes, it refers to the steps necessary for accomplishing assigned tasks

Large organizations often grapple with intricate, bureaucratic processes that prioritize approvals and oversight over user experience, leading to diminished market responsivenessChen noted that the optimal operation for companies is one where internal functions efficiently loop back to achieve objectivesConsequently, organizations should structure themselves around business processes to facilitate intelligent, automated information exchange rather than relying solely on conventional collaboration.

The fourth focal point emphasizes “talent selection and development.”

Once a company has identified the right timing for change, built consensus, and enhanced organizational culture, structure, and processes, the ability to select and cultivate an effective workforce becomes critical for driving successful transformation initiatives.

Gan and Chen shared insights regarding the standards for selecting talent

Gan articulated that while previous focuses were on professional experience, Chow Tai Fook has shifted toward assessing underlying attributes like adaptability, learning capacity, curiosity, and motivationChen added that in addition to sustaining learners’ curiosity, there is a crucial emphasis on aligning with the organization's mission, as this enables employees to navigate uncertainty and variability in both business goals and personal development paths.

Chow Tai Fook places a significant emphasis on tiered management financeAccording to Gan, the company has recently upgraded its Management Trainee (MT) program to better align with future leadership and management needs in frontline operationsThe approach entails personalized development plans tailored to various employee levels, particularly focusing on the “store manager” role—vital for translating strategic intents into customer perceptions.

Chow Tai Fook's focus on talent selection mirrors the overarching talent needs facing the entire retail industry amidst its transitional shift towards omnichannel operations

However, due to the lack of foundational experience in many organizations, external support remains crucialChen shared that Tencent’s smart retail training initiatives have facilitated the development of nearly 30,000 retail enterprises, encompassing aspects of omnichannel awareness, strategy, and executionThis comprehensive training aims at aligning business objectives and equipping frontline teams with operational skills leveraging digital solutions.

Lastly, the fifth theme centers upon “digital empowerment.”

In the traditional operational context, firms have made considerable efforts to boost organizational efficiencyHowever, limitations posed by technological frameworks often hamper breakthroughs in operational processes and talent trainingThe advent of digital technologies provides a viable means to address these challenges.

Chow Tai Fook has also implemented impressive initiatives leveraging digital capabilities to enhance operational processes and improve training efficiencies

Gan shared several noteworthy examples, including how the company’s training team utilizes live streaming to facilitate product training, enabling employees to learn flexiblyRecorded sessions are edited into micro-learning modules for further engagement and reinforcement.

Additionally, Chow Tai Fook has developed an integrated employee app called "Smart People," facilitating various HR tasks while seamlessly linking to business dataThis system allows employees to access essential business insights, resulting in improved decision-making informed by data analyticsMoreover, the app connects to the company's learning system, allowing easy access to comprehensive online learning resources.

An aspect of this digital revolution stems from Chow Tai Fook's collaboration with Tencent, leveraging Tencent's Meeting and WeChat Work products to enhance inter-organizational communication and optimize operational efficiency

Meeting, a well-known online conferencing tool, drastically improves internal communication efficiency and reduces meeting-related costsMoreover, Tencent’s WeCom, an intelligent collaborative learning platform, serves as a pivotal resource for boosting organizational efficiency.

As the digital landscape evolves, WeCom incorporates Tencent’s leading AI capabilities, creating unique user experiencesFor instance, it harnesses the organizational knowledge base to instantly respond to employee inquiries, streamlining knowledge acquisitionThe platform allows employees to generate quizzes and assessments with ease, honing in on knowledge gapsRecent AI coaching features enable personalized, on-demand training tasks tailored to individual employee needsThis is particularly beneficial for retail organizations with considerable talent development requirements.

Utilizing organizational talent capabilities to improve business performance is an invaluable frontier worthy of deeper exploration within the retail sector

Recent reports indicate that Chow Tai Fook’s revenue for the 2024 fiscal year has surpassed HKD 100 billion, a success deeply tied to its proactive organizational changes.

Observing trends within the domestic retail landscape, one can note two companies thriving even amidst market headwinds: Donglai and Sam's ClubBoth have instilled remarkable confidence among industry participantsDonglai has achieved increasing performance without expanding its store count, driven by the commitment of its employees, product quality, and consumer trustSam’s Club has established an innovative retail model that integrates online and offline services, empowering the company to expand its physical presence against the market tide.

These success stories underline that behind the performance of Chow Tai Fook, Donglai, and Sam’s Club lies not only their adept integration of digital solutions but also their commitment to cultivating a human-centric organizational culture

For instance, Sam’s Club perceives itself not merely as a retail entity but as an agent facilitating customers in their quest for top-quality products at the most affordable prices, framing its procurement, SKU management, pricing, and service protocols around this ethos.

Since its inception, Tencent has persistently adhered to a philosophy centered on user value and has demonstrated deep respect for its employees, fostering a culture of trust and empowermentTencent's smart retail approaches not only focus on particular digital tools but also continuously empower organizations to tackle critical transformation challenges and embody the principle of prioritizing user value.

In the near future, as Tencent continues to evolve its transaction ecosystem and digital capabilities, it is poised to deliver even greater value to the Chinese retail landscapeI anticipate that Tencent will delve further into development by harnessing its intrinsic cultural spirit and the organizational practices of diverse retail enterprises, ultimately developing a comprehensive methodology and suite of tools that marry humanistic principles with digital technologies