Industrial Internet does not need 'Internet thinking'

Article Industry News

Five or six years ago, when Internet companies were at their peak, “Internet thinking” was also very popular. It seems that with Internet thinking, all industry problems have been solved.

However, when the Internet thinking met the industrial Internet, the original effective means failed overnight.

In the past two years, no one has talked about “Internet thinking”. After three or four years of development of the industrial Internet, practitioners have increasingly discovered that in this new blue ocean, the original Internet thinking has only brought chaos, impetuousness and fluff. The golden key to the industrial Internet is to be down-to-earth and meticulous.

1

How does the Industrial Internet work?

Ma Huateng mentioned in “Suggestions on Accelerating the Development of the Industrial Internet to Promote the High-quality Development of the Real Economy” that people used to say ‘plug in’, but now they say ‘connect to the cloud’. Just like the indicator meaning of ‘electricity consumption’ in the industrial economy, ‘cloud usage’ will also become an important indicator for measuring the digital economy. This opened the curtain of the transition from the consumer Internet to the industrial Internet.

To discuss the Industrial Internet, we have to start with its connotation.

The Industrial Internet shifts the focus to enterprises in the industrial chain and provides them with Internet services in an all-round way, which is equivalent to treating “enterprises” as “consumers”.

For example, consumers use cloud services to save data, and enterprises can use the enterprise cloud to upload company documents; consumers use social software to make friends, and enterprises can use enterprise social platforms to find businesses; consumers connect their mobile phones and computers to the Internet, and enterprises also Production equipment can be connected to the network.

Bao Fan, the founder of Huaxing Capital, said when he talked about why he invested in the chain, we were faced with a choice: should we support companies with an Internet background to transform the “housing” industry, or bet on a company with a relevant industry background to transform the industry? Later, we analyzed the entire real estate industry and clarified a basic principle: the leading companies in this industry must be built on a solid industrial foundation, so this is why we invested in Lianjia.

In other words, companies with an Internet background cannot transform the industrial chain, nor can Internet thinking do the industrial Internet.

In the past, our Internet in China mainly served end consumers. Improving clothing, food, housing, transportation, spiritual and material life, focusing on connection and presentation, is to provide a convenient future for consumers’ spiritual and material life. As the penetration rate of the Internet in the consumer side has increased significantly, the growth point of the Internet will turn to the industrial side. “Reform has entered the deep water area”, Internet technology will deeply change all aspects of the entire industrial chain and the entire value chain, and fundamentally improve the operation efficiency and production efficiency of the entire industrial chain. Acquisition, transmission, and analysis will play a more important role.

In the six more important links of R&D, production, assembly, service, marketing, and circulation, the Industrial Internet needs to complete digital transformation first, and then complete a digital upgrade. When the digital transformation is completed, five core production factors, or core competencies, are produced—data collection, data transmission, real-time decision-making, resource allocation, and matching supply and demand. When these five core elements interact together, then we start to create value.

The larger direction is that when the industrial Internet has completed its own transformation, and then integrates with the consumer Internet, it will create greater value.

2

When Internet Thinking Meets Industrial Internet

I don’t know if you have noticed, but Internet giants such as Alibaba and Tencent have shown serious discomfort after entering the industrial Internet field. However, companies such as Huawei that do traditional technology business have flourished in this blue ocean.

Analyzing the mode of Internet thinking, whether it is Ali, Tencent, or Baidu, is actually the work of “intermediary”. Ali connects people and goods, Tencent connects people and people, and Baidu connects people and information. When the wave of the Internet recedes, the work of the intermediary does not actually have any technical content.

If we understand and look at Internet thinking from such a perspective, we will find that the so-called Internet thinking is just relying on harvesting traffic and staking a horse, and has not changed the essence of this society and industry.

When it is no longer possible to rely on matchmaking and intermediaries to make profits, and instead start to focus more on the in-depth transformation of the industry, this kind of thinking seems to be a bit out of tune.

In fact, although the industrial Internet has the word “Internet”, the meaning of “Internet” here is quite different from the “Internet” of the consumer Internet. It is not advisable to rely on the traffic thinking of the consumer Internet to run the industrial Internet. We need to abandon the platform model of the consumer Internet era, and take new technologies as the starting point to transform the industrial Internet.

For any player who is interested in making a difference in the industrial Internet era, he cannot just focus on traffic, but needs to deeply intervene in the industry and deeply transform the industry in order to gain new growth space.

3

The Crisis and Opportunity of China’s Industrial Internet

At present, there are still great risks in the digitalization of many traditional enterprises, and the pain points are mainly concentrated in the following three points:

First, traditional enterprises do not face up to the industrial Internet, including external claims that they want to digitize, but it is only an image project, just to catch up. Or there is a savior fantasy. Many entrepreneurs regard digitization as a “panacea”, thinking that with digitization and networking, all the problems in the previous main business can be solved, which is unrealistic.

Second, traditional enterprises will not use the industrial Internet, which is a common problem. The online and offline capabilities of traditional enterprises do not match, but they are eager to advance; the speed is too slow, and it is difficult to keep up with the rhythm of operating with traditional decision-making mechanisms; they are unstable, and they have insufficient expectations for the profitability and protracted battle of the Internet, and miss opportunities.

The third is that traditional enterprises will not build the industrial Internet, they have not sorted out their future business strategies, and blindly build the Internet first, or the product design is unrealistic and does not meet the needs of users.

In other words, people in the industry don’t know how to do the industrial Internet, and people in the Internet industry don’t know how the industry should do it. In the middle, there is a huge human resource gap.

But the prospect of the Industrial Internet in China is huge.

The development of China’s industrial Internet is facing both opportunities and challenges. Challenges may manifest in two ways:

First, the labor cost is still relatively low, and the talent gap is large. This has resulted in business owners being reluctant to invest in technology and relying on low-cost, inefficient, labor-based management for a long time. In the field of industrial Internet, China still lacks a high-quality developer/entrepreneur group like the consumer Internet to promote the rapid development of the industry

Second, the degree of digitization is low, and the industrial Internet standards are chaotic. The development of software in China’s entire IT industry is quite backward, and the standards at the enterprise end are chaotic. Today, a series of measures such as going to IOE have led to inconsistent standards for China’s IT infrastructure, and the environment for large-scale deployment of the same technology is not yet mature.

Therefore, the opportunities for the development of the Industrial Internet are also very large.

At present, China’s demographic dividend is gradually disappearing, and competition has begun to intensify in the stock market. New companies have already seen this trend, and from the operating codes of new unicorns, we can see the new outlets in the future. The anti-monopoly layout at the national level may be paving the way for the vision of a new decade of entrepreneurship.

The future development cannot rely on scale, but on technology. This is the future direction. The state’s crackdown on platform monopoly is not only to protect the rights and interests of consumers, but also to give more opportunities to latecomers, so that new technologies can better drive industrial innovation.

Saying goodbye to “Internet thinking” may be the right direction for the Industrial Internet.

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