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Shanzhai and growth hacking

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This document discusses shanzhai and growth hacking. It begins by defining shanzhai as copied, pirated, or imitation goods, especially in reference to electronics, clothing, food, drink, ads, and mobile phones produced and sold in China. It then outlines the evolution of shanzhai from Shanzhai 1.0, which involved simple copying and grafting, to Shanzhai 2.0 involving layered modular innovations like the Apple Peel phone accessory, to Shanzhai 3.0 companies that develop independent innovation platforms. The document argues that shanzhai firms grow first through copying before developing sources of innovation. It presents case studies of companies like Tencent, Renren, BYD,

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Shanzhai and Growth Hacking DR. VIRGINIA CHA OCTOBER 8, 2012 C H I E F, R E S E A R C H A N D I N N O VAT I O N , INSTITUTE OF SYSTEMS SCIENCE, N AT I O N A L U N I V E R S I T Y O F S I N G P O R E A D J U N C T P R O F E S S O R , S C I E N C E E N T R E P R E N E U R S H I P, I N S E A D ENTREPRENEUR-IN-RESIDENCE, INSEAD EXECUTIVE ADVISOR, NUS ENTREPRENEURSHIP CENTRE ENTREPRENEUR-IN-RESIDENCE, SINGAPORE MANAGEMENT UNIVERSITY
What is Innovation? 2
Product Innovation Image Source: Google Images 3
Process Innovation 4
Process Business Model Innovation Innovation 5
Service Innovation Image Source: Google Images 6
Why do firms pursue innovation? 7
Innovation leads to growth 8
Innovation Frameworks ? Blue Ocean Strategy ? Business Model Canvas ? Disruptive Innovation ? Design Thinking 9
Tool/Strategy: Blue Ocean (Value Innovation) Indicative Case: Cirque du Soleil Framework: Strategy Canvas Approach: Eliminate/Reduce/Raise/Create individual factors VS Source: W. Chan Kim and Mauborgne. Blue Ocean Strategy. Harvard Business School Press. 2005 10
Tool/Strategy: Business Model Canvas Indicative Case: Nespresso Framework: Systematic approach to describe, challenge, design, and invent new business model Source: Alexander Osterwalder and Yves Pigneur. Business Model Generation. 11
Tool/Strategy: Disruptive Innovation Indicative Case: Wii Framework: F k Performance T j t P f Trajectory Ch t Chart Approach: Lower cost product targeting marginal customers with niche feature and grow performance overtime to win mainstream Image Source: http://www.thefgi.net/theory-disruptive-innovation/ 12
Sustaining Strategy Bringing a better product g g p Customer willing to accept extra product performance b t t d t f but into an established market not willing to pay Performance P f Industry Performance Trajectory demanded at the high end of the market Produc Performance ct Performance Disruptive demanded at the low technological end of the market innovation Low-End Disruption Addressing over serviced customers with a lower cost ¡°good-enough¡± business model Time Source: Clayton Christensen. The Innovator¡¯s Dilemma. Harvard Business School Press. 2005 13
Tool/Strategy: Design Thinking Indicative Case: Redesigning the Shopping Cart, IDEO Approach: Collaborative and human centric design human-centric Source: IDEO 14
Design Thinking: IDEO Zinio Reader Heartstream Defibrillator http://www.techdecoded.com/wp-content/uploads/2010/10/Zinio-Reading-Experience-e1286233330137.jpg, http://msnbcmedia.msn.com/j/msnbc/components/photo/_new/110901-defribulator-hmed230p.grid-6x3.jpg 15
Redesigning the Shopping Cart Source: http://www.youtube.com/watch?v=M66ZU2PCIcM 16
Source: http://www.google.com.sg/imghp?hl=en&tab=wi 17
Design Thinking Encourages Prototyping Tab?Interface Tab Interface iPhone Stencil g Ticketing System Source: http://www.google.com.sg/imghp?hl=en&tab=wi 18
Common Characteristics of Innovation Approaches ? Start with Design/Strategy ? Market Understanding ? New Markets/Applications ? Creating Original/Novel Works ? Purposeful go to market model go-to-market 19
Introducing Shanzhai I t d i Sh h i Chinese: ɽկ, sh¨¡nzh¨¤i 20
What is Shanzhai? Copied, Pirated or Imitation Goods ? Electronics ? Clothing ? Food ? Drink ? Ads ? Mobile Phones Source: http://www.google.com.sg/imghp?hl=en&tab=wi 21
Source: http://www.google.com.sg/imghp?hl=en&tab=wi 22
Everything can be shanzhai-ed in China¡­ Shanzhai McDonald and Shanzhai Watson¡¯s Shanzhai Pop stars. Source: and Google Images 23 23
Everything can be shanzhai-ed in China¡­ 24 Source: http://china.globaltimes.cn/editor-picks/2010-05/529441.html 24
Everything can be shanzhai-ed in China¡­ Photo from http://enovatechina.com/blog/shanzhai-phones-the-great-socialist-experiment/ 25 25
Shanzhai 1.0 Copy & Graft Source: and Google Images 26
Products of Shanzhai 1.0 Photos taken by author/research assistants on trips to Huaqiangbei, Shenzhen, 2010-2011 27
Products of Shanzhai 1.0 Photos taken by author at Huaqiangbei, Shenzhen, 2012 28
Components of Shanzhai 1.0 Photos taken by author/research assistants on trips to Huaqiangbei, Shenzhen, 2010-2011 29
Shanzhai 2.0 Apple Peel Released July 2010 as a ¡® ki ¡¯ R l dJ l ¡®skin¡¯ iPod Touch Apple Peel for the iPod Touch It acts like a phone without a screen. Inside contains ? GSM module ? Antenna ? SIM card slot ? Extra battery ? price iPhone Photo source: Virginia Cha 30
The Brothers Behind the Apple Peel Source: TVB Pearl Special Broadcast on Shanzhai and the Apple Peel 31
32 32 Photo source: Virginia Cha
Shanzhai 2.0 No longer just copying hardware (fake iPhones ) Building on existing electronics and through incremental innovation creating products around th ti d t d them (A l peel) (Apple l) Source: http://www.google.com.sg/imghp?hl=en&tab=wi, Photo source: Mili, apple, dx-power company websites. 33
Photo source: http://www.szgaoju.com 34
Apple Pan (Apple Peel 2.0) Thumb drive for iPhone, Th b d i f iPh iPod, and iPad No iTune needed Costs 288 RMB Photo source: http://www.szgaoju.com 35
Shanzhai 2.0 Peel Concept for Software Photo source: Xiaomi 36
Shanzhai 3.0 Innovation Platform Local smart mobile phone developer with own R&D p p development, such as K-Touch, Meizu and Xiaomi All grew first then developed innovations Platform approach: Software + Hardware + Service Image sources: http://cdn.slashgear.com/wp-content/uploads/2012/01/meizu-mx-1.jpg 37 http://www.whatsondalian.com/ent_images/Xiaomi_phone_a881b31faf416736.jpg
Tianyu and Product Innovation 38 Android 2 2 smartphone 2.2 uses dual-core processor NVIDIA Tegra 2 512MB RAM and 8GB of internal memory 480 ¡Á 800 resolution 3.8-inch size touchscreen 5 Megapixel camera which can record 720p video 0.3 Megapixel front camera for video chat supports GPS / A-GPS, Bluetooth and WiFi connectivity. pre-loaded with applications f Si W ib QQ K i i l d d ith li ti for Sina Weibo, QQ, Kaixin, Youku FM-tuner, microSD card slot, digital compass, accelerometer and ambient light sensors 100GB free of online storage cloud computing Released in China in mid-April 2011 through China Unicom to about 3500 Chinese yuan Photo source: Virginia Cha 38
Xiaomi M1 Xiaomi M1 Photo source: Xiaomi 39
Image source: China Daily 40
Progress of the Shanzhai Model of Innovation Copy & Graft Layer & Innovate on Modularity ? I t Interesting ti ? L Layer in i ? N f New forms of f combo of features to fill consumption features at low in gaps of ? Platform cost performance approach and ? Product & ? Single multi- multi GTM dimension disciplinary capabilities R&D capability R&D capability Success at each stage l d to growth h leads h 41
Failures and Winners Not all Shanzhai Producers Make Progress Shanzhai producers who can follow growth path Those who just copy fade away j py y Source: www.booz.com/global/home/what_we_think/featured_content/shan_zhai, http://www.google.com.sg/imghp?hl=en&tab=wi 42
Case Study 1: Tencent Source: www.booz.com/global/home/what_we_think/featured_content/shan_zhai, http://www.google.com.sg/imghp?hl=en&tab=wi 43
Case Study 2: Renren Renren Group SNS Online Games Social Shopping (ala Pinterest) Source: Renren Annual report 44
Case Study 3: BYD¡¯s Manufacturing Cost Innovation ? The BYD F3 is an exact copy of the Toyota Corolla, but costs 50% less to manufacture ? In Zhengzhou, F3 owners can spend a few hundred Yuan to have the BYD emblem h bl replaced with a Toyota one ? BYD Strategy: Cheap products for masses ? Copy through reverse-engineering ? Can you open new markets with cost innovation? Source: http://www.google.com.sg/imghp?hl=en&tab=wi 45
Case Study 4: WingTech ÎÅ Ì© ¼¯ ÍÅ 46 Photos taken by author on visit to Wingtech factory, Jiaxing, China. Aug. 30, 2011 46
Case Study 5: Rigol Technologies Inc. Photo taken by author, Huaqiangbei, Sept 14, 2011 47
48 Photo taken by Virginia Cha, Huaqiangbei, Sept 14, 2011
49 Photo taken by Virginia Cha, Huaqiangbei, Sept 14, 2011
Question: Without design or plan, how do they develop their Go-to-market y p (GTM) capabilities? 50
Shanzhai Mobile Phones ¨C How did it start? Release of MTK Turnkey chipset (2005) created a platform for bazaar High R&D Cost Short Long R&D R&D Cycle Cycle The Advantage of Turn-Key The Turnkey platform shortened the R&D cycle from 9-12 months to < 3 months and lowered the technology costs for middle and small mobile Low R&D Cost phone manufacturers. MTK mobile phone manufacturers Vertically integrated mobile phone manufacturers 51
Shanzhai and the Bazaar ¨C The Ecosystem Provides the fuel to a faster churning supply chain ecosystem Shanzhai Industry in Shenzhen Phone Manufacturers 3000+ Component Manufacturers 3000 Phone Mold Manufacturers 200 Industrial Design 100 Logistics, Trade and Tertiary Businesses 2000+ 52
Shanzhai and the Bazaar ¨C The Ecosystem Quick R&D, Quick Design, Quick Manufacturing, Quick Shipment ? A typical large-scale, vertically integrated, international phone manufacturer (e.g. Apple) takes up to a year from idea to product launch ? In Shenzhen, the main ¡°Bandit city¡± of Shanzhai, manufacturers just need 20 days. ? Shanzhai manufacturers share ideas ? Like Linux: Release Early and Often 53
Product Releases Through Feedback Supply Chain Custo Trade Manuf mer r acturer Speed of feedback collection in Shenzhen? 7 Days 1 Day < 3 Day Customer Trader Manufacturer Synthesized based on interviews conducted from multiple trips to Shenzhen (2010-2011) 54
Fast Iterations from Feedback Shanzhai iPhone 4 2 months ? Traditional back cover ? Irremovable back cover ? internal SIM Card slot ? External SIM Card slot Source: http://www.google.com.sg/imghp?hl=en&tab=wi 55
Can Fast Growth Lead to Innovation? Shanzhai firms grow and develop own sources of innovation Source: http://www.google.com.sg/imghp?hl=en&tab=wi 56
4F¡¯s of Shanzhai Innovation Rapid Product Iterations Low cost Experimentation Modular components Quick Response Affordable Fast Frugal Fit Fad Localization L li i Trend setting d i Targeted features Early adoptor Customized Status seeking 57
Velocity of Implementation -- FAST iPhone and Ciphone Can you tell the difference? y Source: http://www.google.com.sg/imghp?hl=en&tab=wi 58
Relentless Cost Reduction -- FRUGAL Samsung iPhone Galaxy 2 СÃ× 4s S3 S = RMB RMB RMB 5,880 4,999 1,999 1 999 Image source: Google Images 59
Localization -- FIT ? Online Dating Platform Pl f ? 5.5 million monthly active users ? Sell ¡°Stamps¡± for 2 RMB (0.40 SGD) Source: http://www.jiayuan.com/### 60
Fashion Oriented -- FAD Collectibles to let fans (mifan) buy into the xiaomi lifestyle and culture 61
Shanzhai Progression 1.0 is about copy + grafted on improvements 2.0 2 0 is about a fusion of genuine products + accessories to stretch utility 3.0 is about creating own innovation platform GROW FIRST THEN INNOVATE 62
The rules f 21st century h l for Innovation have changed 63
Alternate Innovation Model for the 21st Century FIRST GROW THEN PURSUE INNOVATION 64
Is this a China only phenomenon? INTRODUCING GROWTH HACKING 65
What do these companies have in common? Growth h ki helped to d i growth at these companies i their G h hacking h l d drive h h i in h i beginning (start-up) stages: 66
What is Growth Hacking? Growth hacking is a set of tactics and best practices for growing users Hacking in any method to achieve goals. In this sense the only goal is growth. ¡°A growth hacker is a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth. Is positioning important? Only if a case can be made that it is important for driving sustainable growth (FWIW, a case can generally be made) ¡± (FWIW made). Sean Ellis formerly of Dropbox, now founder and CEO of Q l f d d f Qualaroo Source: http://startup-marketing.com/where-are-all-the-growth-hackers/ 67
Growth Hacking from Airbnb Airbnb, i il to Ai b b similar t couchsurfing, b t with h fi but ith intervention (not p2p). Airbnb reverse engineered its posts to Craigslist, a functioning trustworthy site with a 10M+ user base Leveraged Craigslist traffic to automatically link to airbnb, without sanctioning from Craigslist (¡®stole the traffic¡¯) ffi ¡¯) Airbnb has listings in more than 26,0000 cities and 192 countries. 6 iti d t i Source: http://andrewchen.co/2012/04/27/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/ 68
Pinterest Pinterest i a website started in 2010 that Pi t t is b it t t d i th t allows users to post photos Users can easily post things from other websites to Pinterest Pinterest prompts users to ¡°Describe your pin¡­¡± Currently 11+ million daily unique views As of March 2012 Pinterest is the #3 social networking site in the US with over 104 million unique visitors per month. "YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE, APPLICATION, SERVICES AND SITE CONTENT REMAINS WITH YOU. " Source: http://mashable.com/2012/04/06/pinterest-number-3-social-network/ 69
Dropbox Then: 1. Si Signup D i Driven Homepage H Common now, pioneered here 2. Easy Signup Process Name, Email, Password Now: 3. Refer a Friend With incentives. Also works as a way to track and analyze users activities Source: http://blog.kissmetrics.com/dropbox-hacked-growth/ 70
4. Social Media Incentivize sharing, make your users see a benefit in marketing your product 5. Sharing with Simplicity Very little effort to use service. Simplicity is key 6. Availability on Multiple Devices & Platforms Accessible from mobile and tablet devices Designed specifically for mobile and tablet devices. d i Source: http://www.slashphone.com/dropbox-updates-its-mobile-apps-on-various-platform-2311873 71
Dropbox Analytics ? Simpler Referral Program g ? 22-25% of new users were referred by friends Jan-08 No Growth ? TechCrunch50 ? UI Refresh Hacking Launch ? Simpler Homepage ? Mac, Windows, Linux and Mobile Versions go live Analytics, A/B Testing Source: http://techcrunch.com/2009/04/24/dropbox-now-effortlessly-syncing-files-for-1-million-members/ 72 Source: http://www.crunchbase.com/company/dropbox
De-emphazing Planning ¨C Other Approaches Source: Eric Ries and Steve Blank 73
Innovation Approach vs Growth Approach ? Start with design/strategy ? Start with growth as objective ? New markets/applications ? New customers ? Novel/original works ? Not important to be original ? Market research/prototyping /p yp g ? Experimentation/release early, as test vehicle before product release frequently. Continuous launch beta instead of official releases. ? Purposeful to-to-market p ? Launch first, then iterate the product ? Cathedral ? Bazaar 74
Summary Innovate for Growth ? Blue Ocean Strategy ? Business Model Canvas ? Disruptive Innovation ? Design Thinking Grow first, then Innovate ? Shanzhai as a new form? ? Growth Hacking Which model works for the 21th century? 75
Where Good Ideas Come From http://www.youtube.com/watch?v=NugRZGDbPFU 76
Thank Th k you! ! 77
Photo Credits http://www.flickr.com/photos/smartjunco/384290043/ http://www flickr com/photos/smartjunco/384290043/ Andrew W. Sieber Attribution-NoDerivs License http://www.flickr.com/photos/aqaba/304927371/ John Parkinson Attribution-NoDerivs License http://www.flickr.com/photos/pixelbuilder/7187652204/in/photostream/ Weslie Leung Attribution-NonCommercial License Attribution NonCommercial 78

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Shanzhai and growth hacking

  • 1. Shanzhai and Growth Hacking DR. VIRGINIA CHA OCTOBER 8, 2012 C H I E F, R E S E A R C H A N D I N N O VAT I O N , INSTITUTE OF SYSTEMS SCIENCE, N AT I O N A L U N I V E R S I T Y O F S I N G P O R E A D J U N C T P R O F E S S O R , S C I E N C E E N T R E P R E N E U R S H I P, I N S E A D ENTREPRENEUR-IN-RESIDENCE, INSEAD EXECUTIVE ADVISOR, NUS ENTREPRENEURSHIP CENTRE ENTREPRENEUR-IN-RESIDENCE, SINGAPORE MANAGEMENT UNIVERSITY
  • 7. Why do firms pursue innovation? 7
  • 9. Innovation Frameworks ? Blue Ocean Strategy ? Business Model Canvas ? Disruptive Innovation ? Design Thinking 9
  • 10. Tool/Strategy: Blue Ocean (Value Innovation) Indicative Case: Cirque du Soleil Framework: Strategy Canvas Approach: Eliminate/Reduce/Raise/Create individual factors VS Source: W. Chan Kim and Mauborgne. Blue Ocean Strategy. Harvard Business School Press. 2005 10
  • 11. Tool/Strategy: Business Model Canvas Indicative Case: Nespresso Framework: Systematic approach to describe, challenge, design, and invent new business model Source: Alexander Osterwalder and Yves Pigneur. Business Model Generation. 11
  • 12. Tool/Strategy: Disruptive Innovation Indicative Case: Wii Framework: F k Performance T j t P f Trajectory Ch t Chart Approach: Lower cost product targeting marginal customers with niche feature and grow performance overtime to win mainstream Image Source: http://www.thefgi.net/theory-disruptive-innovation/ 12
  • 13. Sustaining Strategy Bringing a better product g g p Customer willing to accept extra product performance b t t d t f but into an established market not willing to pay Performance P f Industry Performance Trajectory demanded at the high end of the market Produc Performance ct Performance Disruptive demanded at the low technological end of the market innovation Low-End Disruption Addressing over serviced customers with a lower cost ¡°good-enough¡± business model Time Source: Clayton Christensen. The Innovator¡¯s Dilemma. Harvard Business School Press. 2005 13
  • 14. Tool/Strategy: Design Thinking Indicative Case: Redesigning the Shopping Cart, IDEO Approach: Collaborative and human centric design human-centric Source: IDEO 14
  • 15. Design Thinking: IDEO Zinio Reader Heartstream Defibrillator http://www.techdecoded.com/wp-content/uploads/2010/10/Zinio-Reading-Experience-e1286233330137.jpg, http://msnbcmedia.msn.com/j/msnbc/components/photo/_new/110901-defribulator-hmed230p.grid-6x3.jpg 15
  • 16. Redesigning the Shopping Cart Source: http://www.youtube.com/watch?v=M66ZU2PCIcM 16
  • 18. Design Thinking Encourages Prototyping Tab?Interface Tab Interface iPhone Stencil g Ticketing System Source: http://www.google.com.sg/imghp?hl=en&tab=wi 18
  • 19. Common Characteristics of Innovation Approaches ? Start with Design/Strategy ? Market Understanding ? New Markets/Applications ? Creating Original/Novel Works ? Purposeful go to market model go-to-market 19
  • 20. Introducing Shanzhai I t d i Sh h i Chinese: ɽկ, sh¨¡nzh¨¤i 20
  • 21. What is Shanzhai? Copied, Pirated or Imitation Goods ? Electronics ? Clothing ? Food ? Drink ? Ads ? Mobile Phones Source: http://www.google.com.sg/imghp?hl=en&tab=wi 21
  • 23. Everything can be shanzhai-ed in China¡­ Shanzhai McDonald and Shanzhai Watson¡¯s Shanzhai Pop stars. Source: and Google Images 23 23
  • 24. Everything can be shanzhai-ed in China¡­ 24 Source: http://china.globaltimes.cn/editor-picks/2010-05/529441.html 24
  • 25. Everything can be shanzhai-ed in China¡­ Photo from http://enovatechina.com/blog/shanzhai-phones-the-great-socialist-experiment/ 25 25
  • 26. Shanzhai 1.0 Copy & Graft Source: and Google Images 26
  • 27. Products of Shanzhai 1.0 Photos taken by author/research assistants on trips to Huaqiangbei, Shenzhen, 2010-2011 27
  • 28. Products of Shanzhai 1.0 Photos taken by author at Huaqiangbei, Shenzhen, 2012 28
  • 29. Components of Shanzhai 1.0 Photos taken by author/research assistants on trips to Huaqiangbei, Shenzhen, 2010-2011 29
  • 30. Shanzhai 2.0 Apple Peel Released July 2010 as a ¡® ki ¡¯ R l dJ l ¡®skin¡¯ iPod Touch Apple Peel for the iPod Touch It acts like a phone without a screen. Inside contains ? GSM module ? Antenna ? SIM card slot ? Extra battery ? price iPhone Photo source: Virginia Cha 30
  • 31. The Brothers Behind the Apple Peel Source: TVB Pearl Special Broadcast on Shanzhai and the Apple Peel 31
  • 32. 32 32 Photo source: Virginia Cha
  • 33. Shanzhai 2.0 No longer just copying hardware (fake iPhones ) Building on existing electronics and through incremental innovation creating products around th ti d t d them (A l peel) (Apple l) Source: http://www.google.com.sg/imghp?hl=en&tab=wi, Photo source: Mili, apple, dx-power company websites. 33
  • 35. Apple Pan (Apple Peel 2.0) Thumb drive for iPhone, Th b d i f iPh iPod, and iPad No iTune needed Costs 288 RMB Photo source: http://www.szgaoju.com 35
  • 36. Shanzhai 2.0 Peel Concept for Software Photo source: Xiaomi 36
  • 37. Shanzhai 3.0 Innovation Platform Local smart mobile phone developer with own R&D p p development, such as K-Touch, Meizu and Xiaomi All grew first then developed innovations Platform approach: Software + Hardware + Service Image sources: http://cdn.slashgear.com/wp-content/uploads/2012/01/meizu-mx-1.jpg 37 http://www.whatsondalian.com/ent_images/Xiaomi_phone_a881b31faf416736.jpg
  • 38. Tianyu and Product Innovation 38 Android 2 2 smartphone 2.2 uses dual-core processor NVIDIA Tegra 2 512MB RAM and 8GB of internal memory 480 ¡Á 800 resolution 3.8-inch size touchscreen 5 Megapixel camera which can record 720p video 0.3 Megapixel front camera for video chat supports GPS / A-GPS, Bluetooth and WiFi connectivity. pre-loaded with applications f Si W ib QQ K i i l d d ith li ti for Sina Weibo, QQ, Kaixin, Youku FM-tuner, microSD card slot, digital compass, accelerometer and ambient light sensors 100GB free of online storage cloud computing Released in China in mid-April 2011 through China Unicom to about 3500 Chinese yuan Photo source: Virginia Cha 38
  • 39. Xiaomi M1 Xiaomi M1 Photo source: Xiaomi 39
  • 41. Progress of the Shanzhai Model of Innovation Copy & Graft Layer & Innovate on Modularity ? I t Interesting ti ? L Layer in i ? N f New forms of f combo of features to fill consumption features at low in gaps of ? Platform cost performance approach and ? Product & ? Single multi- multi GTM dimension disciplinary capabilities R&D capability R&D capability Success at each stage l d to growth h leads h 41
  • 42. Failures and Winners Not all Shanzhai Producers Make Progress Shanzhai producers who can follow growth path Those who just copy fade away j py y Source: www.booz.com/global/home/what_we_think/featured_content/shan_zhai, http://www.google.com.sg/imghp?hl=en&tab=wi 42
  • 43. Case Study 1: Tencent Source: www.booz.com/global/home/what_we_think/featured_content/shan_zhai, http://www.google.com.sg/imghp?hl=en&tab=wi 43
  • 44. Case Study 2: Renren Renren Group SNS Online Games Social Shopping (ala Pinterest) Source: Renren Annual report 44
  • 45. Case Study 3: BYD¡¯s Manufacturing Cost Innovation ? The BYD F3 is an exact copy of the Toyota Corolla, but costs 50% less to manufacture ? In Zhengzhou, F3 owners can spend a few hundred Yuan to have the BYD emblem h bl replaced with a Toyota one ? BYD Strategy: Cheap products for masses ? Copy through reverse-engineering ? Can you open new markets with cost innovation? Source: http://www.google.com.sg/imghp?hl=en&tab=wi 45
  • 46. Case Study 4: WingTech ÎÅ Ì© ¼¯ ÍÅ 46 Photos taken by author on visit to Wingtech factory, Jiaxing, China. Aug. 30, 2011 46
  • 47. Case Study 5: Rigol Technologies Inc. Photo taken by author, Huaqiangbei, Sept 14, 2011 47
  • 48. 48 Photo taken by Virginia Cha, Huaqiangbei, Sept 14, 2011
  • 49. 49 Photo taken by Virginia Cha, Huaqiangbei, Sept 14, 2011
  • 50. Question: Without design or plan, how do they develop their Go-to-market y p (GTM) capabilities? 50
  • 51. Shanzhai Mobile Phones ¨C How did it start? Release of MTK Turnkey chipset (2005) created a platform for bazaar High R&D Cost Short Long R&D R&D Cycle Cycle The Advantage of Turn-Key The Turnkey platform shortened the R&D cycle from 9-12 months to < 3 months and lowered the technology costs for middle and small mobile Low R&D Cost phone manufacturers. MTK mobile phone manufacturers Vertically integrated mobile phone manufacturers 51
  • 52. Shanzhai and the Bazaar ¨C The Ecosystem Provides the fuel to a faster churning supply chain ecosystem Shanzhai Industry in Shenzhen Phone Manufacturers 3000+ Component Manufacturers 3000 Phone Mold Manufacturers 200 Industrial Design 100 Logistics, Trade and Tertiary Businesses 2000+ 52
  • 53. Shanzhai and the Bazaar ¨C The Ecosystem Quick R&D, Quick Design, Quick Manufacturing, Quick Shipment ? A typical large-scale, vertically integrated, international phone manufacturer (e.g. Apple) takes up to a year from idea to product launch ? In Shenzhen, the main ¡°Bandit city¡± of Shanzhai, manufacturers just need 20 days. ? Shanzhai manufacturers share ideas ? Like Linux: Release Early and Often 53
  • 54. Product Releases Through Feedback Supply Chain Custo Trade Manuf mer r acturer Speed of feedback collection in Shenzhen? 7 Days 1 Day < 3 Day Customer Trader Manufacturer Synthesized based on interviews conducted from multiple trips to Shenzhen (2010-2011) 54
  • 55. Fast Iterations from Feedback Shanzhai iPhone 4 2 months ? Traditional back cover ? Irremovable back cover ? internal SIM Card slot ? External SIM Card slot Source: http://www.google.com.sg/imghp?hl=en&tab=wi 55
  • 56. Can Fast Growth Lead to Innovation? Shanzhai firms grow and develop own sources of innovation Source: http://www.google.com.sg/imghp?hl=en&tab=wi 56
  • 57. 4F¡¯s of Shanzhai Innovation Rapid Product Iterations Low cost Experimentation Modular components Quick Response Affordable Fast Frugal Fit Fad Localization L li i Trend setting d i Targeted features Early adoptor Customized Status seeking 57
  • 58. Velocity of Implementation -- FAST iPhone and Ciphone Can you tell the difference? y Source: http://www.google.com.sg/imghp?hl=en&tab=wi 58
  • 59. Relentless Cost Reduction -- FRUGAL Samsung iPhone Galaxy 2 СÃ× 4s S3 S = RMB RMB RMB 5,880 4,999 1,999 1 999 Image source: Google Images 59
  • 60. Localization -- FIT ? Online Dating Platform Pl f ? 5.5 million monthly active users ? Sell ¡°Stamps¡± for 2 RMB (0.40 SGD) Source: http://www.jiayuan.com/### 60
  • 61. Fashion Oriented -- FAD Collectibles to let fans (mifan) buy into the xiaomi lifestyle and culture 61
  • 62. Shanzhai Progression 1.0 is about copy + grafted on improvements 2.0 2 0 is about a fusion of genuine products + accessories to stretch utility 3.0 is about creating own innovation platform GROW FIRST THEN INNOVATE 62
  • 63. The rules f 21st century h l for Innovation have changed 63
  • 64. Alternate Innovation Model for the 21st Century FIRST GROW THEN PURSUE INNOVATION 64
  • 65. Is this a China only phenomenon? INTRODUCING GROWTH HACKING 65
  • 66. What do these companies have in common? Growth h ki helped to d i growth at these companies i their G h hacking h l d drive h h i in h i beginning (start-up) stages: 66
  • 67. What is Growth Hacking? Growth hacking is a set of tactics and best practices for growing users Hacking in any method to achieve goals. In this sense the only goal is growth. ¡°A growth hacker is a person whose true north is growth. Everything they do is scrutinized by its potential impact on scalable growth. Is positioning important? Only if a case can be made that it is important for driving sustainable growth (FWIW, a case can generally be made) ¡± (FWIW made). Sean Ellis formerly of Dropbox, now founder and CEO of Q l f d d f Qualaroo Source: http://startup-marketing.com/where-are-all-the-growth-hackers/ 67
  • 68. Growth Hacking from Airbnb Airbnb, i il to Ai b b similar t couchsurfing, b t with h fi but ith intervention (not p2p). Airbnb reverse engineered its posts to Craigslist, a functioning trustworthy site with a 10M+ user base Leveraged Craigslist traffic to automatically link to airbnb, without sanctioning from Craigslist (¡®stole the traffic¡¯) ffi ¡¯) Airbnb has listings in more than 26,0000 cities and 192 countries. 6 iti d t i Source: http://andrewchen.co/2012/04/27/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/ 68
  • 69. Pinterest Pinterest i a website started in 2010 that Pi t t is b it t t d i th t allows users to post photos Users can easily post things from other websites to Pinterest Pinterest prompts users to ¡°Describe your pin¡­¡± Currently 11+ million daily unique views As of March 2012 Pinterest is the #3 social networking site in the US with over 104 million unique visitors per month. "YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE, APPLICATION, SERVICES AND SITE CONTENT REMAINS WITH YOU. " Source: http://mashable.com/2012/04/06/pinterest-number-3-social-network/ 69
  • 70. Dropbox Then: 1. Si Signup D i Driven Homepage H Common now, pioneered here 2. Easy Signup Process Name, Email, Password Now: 3. Refer a Friend With incentives. Also works as a way to track and analyze users activities Source: http://blog.kissmetrics.com/dropbox-hacked-growth/ 70
  • 71. 4. Social Media Incentivize sharing, make your users see a benefit in marketing your product 5. Sharing with Simplicity Very little effort to use service. Simplicity is key 6. Availability on Multiple Devices & Platforms Accessible from mobile and tablet devices Designed specifically for mobile and tablet devices. d i Source: http://www.slashphone.com/dropbox-updates-its-mobile-apps-on-various-platform-2311873 71
  • 72. Dropbox Analytics ? Simpler Referral Program g ? 22-25% of new users were referred by friends Jan-08 No Growth ? TechCrunch50 ? UI Refresh Hacking Launch ? Simpler Homepage ? Mac, Windows, Linux and Mobile Versions go live Analytics, A/B Testing Source: http://techcrunch.com/2009/04/24/dropbox-now-effortlessly-syncing-files-for-1-million-members/ 72 Source: http://www.crunchbase.com/company/dropbox
  • 73. De-emphazing Planning ¨C Other Approaches Source: Eric Ries and Steve Blank 73
  • 74. Innovation Approach vs Growth Approach ? Start with design/strategy ? Start with growth as objective ? New markets/applications ? New customers ? Novel/original works ? Not important to be original ? Market research/prototyping /p yp g ? Experimentation/release early, as test vehicle before product release frequently. Continuous launch beta instead of official releases. ? Purposeful to-to-market p ? Launch first, then iterate the product ? Cathedral ? Bazaar 74
  • 75. Summary Innovate for Growth ? Blue Ocean Strategy ? Business Model Canvas ? Disruptive Innovation ? Design Thinking Grow first, then Innovate ? Shanzhai as a new form? ? Growth Hacking Which model works for the 21th century? 75
  • 76. Where Good Ideas Come From http://www.youtube.com/watch?v=NugRZGDbPFU 76
  • 78. Photo Credits http://www.flickr.com/photos/smartjunco/384290043/ http://www flickr com/photos/smartjunco/384290043/ Andrew W. Sieber Attribution-NoDerivs License http://www.flickr.com/photos/aqaba/304927371/ John Parkinson Attribution-NoDerivs License http://www.flickr.com/photos/pixelbuilder/7187652204/in/photostream/ Weslie Leung Attribution-NonCommercial License Attribution NonCommercial 78