Co-evolution Strategy Canvas

“Co-evolution Strategy Canvas is inclusive and dynamic, profound and focused. It provides a verypractical methodology for entrepreneurs and managers to build end-game thinking.”

—Ming-Jer Chen, a world-famous expert in Strategy

“Co-evolution Strategy Canvas provides a great strategic thinking framework for entrepreneurs, aswell as a channel for enterprises to operate amidst the fog of uncertainties.”

—Chunhua Chen, Chair Professor, National School of Developmentof Peking University

“In such an amorphous mashup, if managers can rethink their own firms’ strategy based onCo-evolution Strategy Canvas, they may take a tumble and get relieved from anxiety of strategicdecision-making.”

—Shanyou Li, Founder of Hundun University

“The dynamic and systematic strategic thinking framework of Co-evolution Strategy Canvasprovides a set of framework and guidance of action for managers who are in urgent need ofimproving their strategic critical thinking capability.”

—Jianwen Liao, Senior Vice President and Chief Strategy Officer of Jing Dong

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“The most attractive thing of Co-evolution Strategy Canvas is that the framework of this book isbuilt on the theory of complexity. Nowadays, a deep understanding of complexity and chaos is anecessity of an effective corporate strategy.”

—Deng Fan, Founder of Spiritual Wealth Club

“Co-evolution Strategy Canvas is an operating system for Chinese firms, of which the theoreticalthinking is palpable and the collective wisdom is interactive. It is a valuable book for firms to makestrategic plans.”

—Shi Xu, Chairman of Beijing Seeyon Software

“Co-evolution Strategy Canvas presents a framework for corporate strategy systematically anddynamically. it provides a set of practical tools for the implementation of co-evolution strategy.”

—De Liu, Co-Founder and Senior Vice President of Xiaomi

“Co-evolution Strategy Canvas not only provides an example for scholars to develop originalthoughts of management, but also offers a set of navigation charts for firm innovation topractitioners.”

—Weiru Chen, Chief Strategy Officer of Alibaba Group, Cainiao Network

“Co-evolution Strategy Canvas is one of the best books on start-up’ strategy I’ve read in recentyears. It clearly explains how start-ups should develop their strategies.”

—Lixin Nan, Producer of Cyzone

“Co-evolution Strategy Canvas offers a systematic and dynamic strategic framework, which allowsyou to keep the whole picture in mind but start with the daily route.”

—Zhaofeng Xue, Keynote Speaker for Xue Zhaofeng’s Economics Class

“Co-evolution Strategy Canvas is a ‘unified theory’ of firms’ evolution from start-ups toexcellence. It suggests that the most brilliant management happens to coincide with how speciesevolve.”

—Weigang Wan, Author of Elite Daily Class in Iget

Jiang Yong Lu

Co-evolution StrategyCanvas

123

Jiang Yong LuDepartment of Organizationand Strategic ManagementPeking UniversityBeijing, China

ISBN 978-981-15-5987-7 ISBN 978-981-15-5988-4 (eBook)https://doi.org/10.1007/978-981-15-5988-4

Jointly published with Beijing Huazhang Graphics & Information Co., Ltd, China Machine PressThe print edition is not for sale in China (Mainland). Customers from China (Mainland) please order theprint book from: Beijing Huazhang Graphics & Information Co., Ltd, China Machine Press.

© Beijing Huazhang Graphics & Information Co., Ltd, China Machine Press 2021This work is subject to copyright. All rights are reserved by the Publishers, whether the whole or partof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmissionor information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodology now known or hereafter developed.The use of general descriptive names, registered names, trademarks, service marks, etc. in thispublication does not imply, even in the absence of a specific statement, that such names are exempt fromthe relevant protective laws and regulations and therefore free for general use.The publishers, the authors, and the editors are safe to assume that the advice and information in thisbook are believed to be true and accurate at the date of publication. Neither the publishers nor theauthors or the editors give a warranty, express or implied, with respect to the material contained herein orfor any errors or omissions that may have been made. The publishers remain neutral with regard tojurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd.The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721,Singapore

Preface

Since the reform and opening up, China’s economy has experienced remarkabledevelopment. Nevertheless, there still exists a big gap between Chinese companiesand their leading counterparts in the world regarding the R&D capability.

Take the mobile phone industry as an example. Chinese companies haveadvanced a lot in producing mobile terminals, but are still weak at producing chips.As for the software of mobile phones, while many app developers are Chinesecompanies, the global operating systems are still controlled by two US companies,Apple and Google.

Therefore, although the number of Chinese companies listed among the FortuneGlobal 500 may catch up with that of the USA within a few years, the fundamental“operating systems” of major industries are still in the hand of European and UScompanies, with Chinese companies focusing mostly on developing “apps.”

The situation is neither optimistic in the field of business management. Amongthe 2017 Global “Management Thinkers 50,” the top 25 are all Western. RuiminZhang, CEO of Haier, is the only one from China who is short-listed, ranked 26th.

If you take a look at books related to corporate management in China’s domesticmarket, you will find that most of the best-selling books are “imported goods.”A few books written by Chinese that enter the best-selling list are mostly cases orentrepreneurs’ personal biographies, whereas books introduced of Western coun-tries are associated with rules or principles of management.

If we regard companies as “apps” developed based on entrepreneurs’ manage-ment insights, the “operating systems” of Chinese companies are almost allimported. Despite the fact that “knowledge has no borders,” it is hard to imaginethat Chinese companies developed based on the “management operating systems”of Europe and USA can outperform European and US companies.

To this end, it is a need of developing Chinese companies’ own “managementoperating system,” based on their external environment, values, and managementexperiences.

v

A complete “management operating system” should cover four levels of phi-losophy, theory, tools, and experience. Philosophy is the value of management,theory is the mind-set of management, tools are the methodology of management,and experience is the accumulation of management practices.

Co-evolution Strategy Canvas is a “management operating system.”

Philosophy: Understanding the “people,” “issue,” and “time” of companies fromthe perspective of “human, earth, sky”; understanding the “thesis–antithesis–syn-thesis” of decision-making from the perspective of systematicness and dynamics.

Theory: Developing a theoretical framework that addresses 5W1H, that is Why,Who, What, Where, When, and How, fundamental strategic issues of companiesfrom the perspective of the four elements, four stages, and four paths of strategy.

Tools: Providing more than 50 practical tools that help to analyze the elements ofpeople and issues, internal and external aspects of business strategy, and tounderstand the strategic points of different stages in firms’ life cycle.

Experience: Summarizing a set of strategic mind-sets from more than 200 com-panies’ cases, which has been verified by many outstanding entrepreneurs andmanagers.

No matter you are an entrepreneur, a manager, or a talent in companies,Co-evolution Strategy Canvas can help you to understand the current position,undertake the whole picture, predict the ending, and cope with changes.

At last, I appreciate the financial support provided by National ScienceFoundation of China (# 71525004, # 72072003).

Beijing, China Jiang Yong Lu

vi Preface

Contents

1 Co-evolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 The Meaning of “Co-evolution” (共演) . . . . . . . . . . . . . . . . . . . . 1

1.1.1 Formula: Co-evolution = Systematicness �Dynamism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.2 The Definition of “Strategy” (战略) . . . . . . . . . . . . . . . . . . . . . . . 61.2.1 Formula: Strategy = Insight � Vision . . . . . . . . . . . . . . . . 7

1.3 The World of “Complexity”(复杂) . . . . . . . . . . . . . . . . . . . . . . . 121.3.1 Complexity = Uncertainty � Discontinuity . . . . . . . . . . . . 131.3.2 Complexity and Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201.3.3 Tools for Four Life Stage Analysis . . . . . . . . . . . . . . . . . . 211.3.4 Types of Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . 221.3.5 Tools for Four Basis Strategy Analysis . . . . . . . . . . . . . . . 24

1.4 Knowledge System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261.4.2 Two Examples of Knowledge System . . . . . . . . . . . . . . . . 281.4.3 Tools for Knowledge System Analysis . . . . . . . . . . . . . . . 31

2 Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352.1 The First Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

2.1.1 The First Principle of Firms . . . . . . . . . . . . . . . . . . . . . . . 352.2 Six Key Strategic Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

2.2.1 Tools for Six Key Strategic Questions . . . . . . . . . . . . . . . 402.2.2 Golden Circle Principles . . . . . . . . . . . . . . . . . . . . . . . . . 42

2.3 Users: Reason for Being . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 432.3.1 Case Analysis: The Application of AARRR . . . . . . . . . . . 45

2.4 Organization: Source of Capability . . . . . . . . . . . . . . . . . . . . . . . 472.4.1 Case Analysis: The Organization of Alibaba . . . . . . . . . . . 48

2.5 Product: Basis of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502.5.1 Case Analysis: Product Development . . . . . . . . . . . . . . . . 51

vii

2.6 Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532.6.1 Case Analysis: Value Network in the Market . . . . . . . . . . 55

2.7 Co-Evolution Strategy Canvas . . . . . . . . . . . . . . . . . . . . . . . . . . . 562.7.1 Co-Evolution Strategy Canvas (12 Strategic Points) . . . . . . 582.7.2 Co-Evolution Strategy Canvas (36 Strategic Items) . . . . . . 59

3 Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613.1 Lifecycle of User Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

3.1.1 Lifecycle for User Elements . . . . . . . . . . . . . . . . . . . . . . . 613.1.2 Lifecycle of Organization Elements . . . . . . . . . . . . . . . . . 653.1.3 Double-S Curves of Organization Value . . . . . . . . . . . . . . 673.1.4 Lifecycle of Product Elements . . . . . . . . . . . . . . . . . . . . . 703.1.5 Double-S Curves of Product Value . . . . . . . . . . . . . . . . . . 723.1.6 Lifecycle of Market Elements . . . . . . . . . . . . . . . . . . . . . . 743.1.7 Double-S Curves of Market Value . . . . . . . . . . . . . . . . . . 76

3.2 Double-S Curves of Market Value . . . . . . . . . . . . . . . . . . . . . . . . 793.2.1 From Start-up to Excellence . . . . . . . . . . . . . . . . . . . . . . . 803.2.2 Start-up from Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

3.3 Core Algorithm of Life Code . . . . . . . . . . . . . . . . . . . . . . . . . . . 833.3.1 4 Phases and 4 Arithmetic Operations . . . . . . . . . . . . . . . . 84

3.4 4 Elements and 4 Criteria of Benefits . . . . . . . . . . . . . . . . . . . . . 853.4.1 Start-up Stage: User-Centric Capability . . . . . . . . . . . . . . . 863.4.2 Growing-up Stage: Product-Iteration Capability . . . . . . . . . 883.4.3 Expansion Stage: Market- Entry Capability . . . . . . . . . . . . 913.4.4 Transformation Stage: Organization-Upgrading

Capability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943.5 4 Dimensions of Space and 4 Patterns . . . . . . . . . . . . . . . . . . . . . 98

3.5.1 4 Dimensions of Space + 4 Patterns . . . . . . . . . . . . . . . . . 983.5.2 Enterprise Value Model Tool . . . . . . . . . . . . . . . . . . . . . . 993.5.3 Championship in the 4 Strategic Phases and 4 Major

Martial Arts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

4 Start-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034.1 4 Questions for Start-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

4.1.1 4 Questions for Start-Up Tools . . . . . . . . . . . . . . . . . . . . . 1054.2 12 Key Points for Start-Up Stage . . . . . . . . . . . . . . . . . . . . . . . . 113

4.2.1 Co-evolution Strategy Canvas for Start-Up Stage . . . . . . . . 1144.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 115

5 Growing-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1175.1 4 Questions for Growing-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

5.1.1 4 Questions for Growing-Up Tools . . . . . . . . . . . . . . . . . . 119

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5.2 12 Key Points of the Focused Growing-Up Stage . . . . . . . . . . . . . 1255.2.1 Co-evolution Strategy Canvas for the Focused

Growing-Up Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1265.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 127

6 Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1296.1 4 Questions for Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

6.1.1 4 Questions for Expansion Tools . . . . . . . . . . . . . . . . . . . 1316.2 12 Key Points of the Amplifying Expansion Stage . . . . . . . . . . . . 138

6.2.1 Co-evolution Strategy Canvas for the AmplifyingExpansion Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

6.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 139

7 Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417.1 4 Questions for Transformation . . . . . . . . . . . . . . . . . . . . . . . . . . 142

7.1.1 4 Questions for Transformation Tools . . . . . . . . . . . . . . . . 1437.2 12 Key Points of the Upgrading Transformation Stage . . . . . . . . . 150

7.2.1 Co-evolution Strategy Canvas for the UpgradingTransformation Stage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

7.2.2 Case Analysis: Alibaba . . . . . . . . . . . . . . . . . . . . . . . . . . 152

8 Systematicness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1538.1 Systematicness of Co-evolution Strategy . . . . . . . . . . . . . . . . . . . 153

8.1.1 Feedback: The Operating Mechanism of the System . . . . . 1558.1.2 Enhanced Loop and Regulative Loops . . . . . . . . . . . . . . . 1568.1.3 Synergies Among Four Elements . . . . . . . . . . . . . . . . . . . 1588.1.4 Basic Principles of Synergy Between Elements . . . . . . . . . 173

8.2 Equation of Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

9 Dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1879.1 Dynamics of Co-evolution Strategy . . . . . . . . . . . . . . . . . . . . . . . 187

9.1.1 Enhanced Feedback Loop for Changes in StrategicElements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191

9.1.2 Mechanisms of Enhanced Feedback Loop for Userand Organization Elements . . . . . . . . . . . . . . . . . . . . . . . . 192

9.1.3 Mechanisms of Enhanced Feedback Loop for Productand Market Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

9.1.4 Feedback Loop System for User Elements in DifferentStages of Development . . . . . . . . . . . . . . . . . . . . . . . . . . 196

9.1.5 Feedback Loop System for Organization Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 197

9.1.6 Feedback Loop System for Product Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 198

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9.1.7 Feedback Loop System for Market Elementsin Different Stages of Development . . . . . . . . . . . . . . . . . 199

9.1.8 Four Paths of Evolutions . . . . . . . . . . . . . . . . . . . . . . . . . 2009.2 16-Word Formula of Co-evolution Strategy . . . . . . . . . . . . . . . . . 2069.3 Canvas and Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

9.3.1 Canvas for User Evolution Path . . . . . . . . . . . . . . . . . . . . 2079.3.2 Canvas for Organization Evolution Path . . . . . . . . . . . . . . 2099.3.3 Canvas for Product Evolution Path . . . . . . . . . . . . . . . . . . 2119.3.4 Canvas for Market Evolution Path . . . . . . . . . . . . . . . . . . 212

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

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