Editor’s note: This article is from the micro-channel public number “wisdom cloud the Board of Directors” (ID: izhihuiyun), Author: Chen Xue frequency, 36 krypton release authorized.

Baidu was once the Internet company with the highest market value in China, but it has grown slowly in recent years, not only surpassed by Alibaba and Tencent, but even lags behind the latecomers Meituan and Pinduoduo.This article analyzes Baidu’s strategy and business layout and finds that although Baidu once fell behind in the era of mobile Internet, it still has the opportunity to turn over in the field of artificial intelligence and stage a good show similar to Microsoft’s transformation, but the premise is that Baidu must be in the organizationContinue to optimize in terms of culture and culture to create a more open ecological organization.
Over the past two years, Baidu has performed poorly in the capital market.On May 31, 2018, Baidu’s stock price reached a record high of $284, and its market value also reached a record high of $98 billion.Since then, Baidu’s share price has been in a decline channel until it fell to $82 on March 31, 2020 before it began to rebound.At this time, the market value of Baidu is US$28.3 billion, which is a decrease of more than 70% compared with 20 months ago, which is equivalent to Baidu’s market value 10 years ago.After that, Baidu’s stock price began to rebound and rebounded to $123 on June 22, 2020, which is a nearly 50% increase compared to more than two months ago.
By further lengthening the timeline, Baidu’s stock price has fluctuated in the past decade.In 2011, Baidu was once the Internet company with the highest market value in China, and Alibaba and Tencent also called BAT.At that time, Tencent had just experienced the baptism of the 3Q war, the morale of the company was sluggish, Alibaba only had B2B business listed, and the stock price was also sluggish.At that time, investors were more optimistic about Baidu, which is unique in the search field, rather than Alibaba and Tencent, which are still exploring business boundaries.Everyone thinks that Baidu is China’s most powerful Internet company, with more room for imagination in the future.
Baidu’s stock price changes in the past 10 years
Ten years later, Tencent’s stock price has increased more than 20 times. Alibaba has experienced the delisting of B2B business and the listing of the group. The market value of both companies has exceeded 500 billion US dollars, but Baidu’s market value still fluctuates.Ten years ago, Meituan, ByteDance, Didi, and Pinduoduo had not yet been established, but now the market value of Meituan and Pinduoduo have exceeded 100 billion US dollars, and the valuation of ByteDance and Didi in the primary market is alsoAre higher than Baidu.Although the business model of each company is different, it is not necessarily correct to judge the value of a company by market value, but it can at least reflect the investor’s confidence in this company.
“The market is a voter in the short term, and a weigher in the long term.” This is the famous quote of value investment godfather Benjamin Graham, and was also regarded by his student Warren Buffett as a guild, meaning that a company’s stock price fluctuations are investors in the short termBased on the results of holding market value voting, the company’s share price in the long run can reflect the true value of the company.If I judge a company with the concept of value investment, I can’t judge the future of a company solely through the company’s financial report, but also judge the company from the perspective of the company’s strategy, products, organization, talent and culture.The prospects and thus evaluate its value.
This article analyzes the reasons for Baidu’s poor performance in the capital market from the perspective of value investment, and predicts its possible future market performance based on its strategic and business layout.This article also hopes to answer the question: After a former industry hegemony encounters a growth stall, can it regain its former vitality?
01. What is the reason behind Baidu’s decline in market value?
There are many articles on Baidu’s market value decline analysis, mostly based on quantitative and qualitative analysis.Regardless of the analysis method, we must start with Baidu’s financial report. Let us first analyze Baidu’s financial statements over the past three years.
Analysis of Baidu’s financial statements from 2017 to 2020
As can be seen from Baidu’s financial statements, Baidu’s main revenue is online advertising, especially search engines and video advertising.From the data, Baidu’s online advertising revenue has not increased significantly in the past three years.After the Spring Festival of 2020, due to the outbreak of the new coronavirus, the amount of advertising dropped sharply, which also caused Baidu’s revenue in the first quarter of 2020 to decline by double digits.In addition, in March, the United States suffered a stock disaster that has not been encountered for a hundred years. All stocks have plunged. The two reasons are superimposed. This is also the main reason for Baidu’s stock price decline this year.
From the perspective of the growth of subdivided industries, the slow growth of Baidu’s core revenue is closely related to the changes in Internet traffic.In the era of the PC Internet, Baidu controlled the entrance of Internet information. “Something, Baidu” has become the behavior habit of a generation.However, with the rise of the mobile Internet, especially social media, the information control advantages of search engines have been weakened, and the ways of obtaining information have become more diversified. WeChat, Weibo, video, Toutiao, and Douyin are all dispersing Baidu’s traffic.With the dispersion of traffic, the decline in online advertising revenue brought by search is inevitable.
According to the “2019 Internet Advertising Development Report” released by Zhongguancun Interactive Marketing Lab, China’s total Internet advertising revenue in 2019 was about 436.7 billion yuan, an increase of 18.2% compared to the previous year.Among them, advertisements from e-commerce platforms accounted for 35.9% of the total, ranking first, an increase of 3% from 2018; search platform advertisements still ranked second with a share of 14.9%, but fell from 21% in 2018Nearly one-third; revenue from video platforms increased by 43% year-on-year, replacing news and information platforms and becoming the third largest Internet advertising platform.Baidu’s main source of income is revenue from search engines and video platforms, especially advertising revenue from search, so it is inevitable that revenue will decline due to industry influence.
Ranking of media platforms by online advertising revenue in 2019
Let’s analyze the top ten rankings of Internet advertising in China.The company with the largest online advertising revenue in China is Alibaba. This is mainly because Alibaba is the leader of e-commerce platforms, and this subdivision track accounts for 35.9% of all online advertising media channels, so its revenue exceeds 1,000.100 million yuan.Due to its outstanding performance in short videos (Douyin) and news media (Toutiao), ByteDance has already surpassed Baidu in revenue, becoming the second largest online advertising revenue company in China.It can be seen that the most important reason for Baidu’s growth stall is due to the decline in the growth rate of its subdivided industries.
There are many reasons for determining the market value of a company, and there are many financial models in this regard.If highly simplified, the market value is the investor’s judgment on the company’s future value. This judgment is generally based on two points: one is the company’s current financial performance, and the core data includes the company’s sales and profits, which is a quantitative and relatively staticConcept; the second is the company’s future growth potential, including the company’s growth trend over the past period, and the company’s comprehensive judgment on growth potential, which is a qualitative and relatively dynamic judgment.
Using this market value model, we can see that there are three main reasons for Baidu’s market value decline: The first is the decline in core business revenue, which results in the company’s poor financial performance and affects investor confidence.The second is that although Baidu’s R&D investment has been steadily increasing over the past three years, and it has achieved technological breakthroughs in AI and income in the AI ​​field is also rising, investors are still on the sidelines in the future of this field.The third is that the external environment suffered from the epidemic situation and stock market impact of a 100-year period, which caused all companies to experience a decline in stock prices. Baidu is of course no exception.
It now appears that Baidu’s worst time should have passed.
First, there are two significant changes in Baidu search. First, the end-to-end search continues to grow, accounting for more than 50% of the overall mobile search; second, AI search brings nearly 60% of logged-in users, and more and more advertisers useHundreds of house numbers, hosting pages and small program marketing operations.Baidu search advertising once had an operating profit margin of up to 50%, and now the profit margin remains above 40%, and the core revenue is expected to trend better year-on-year.
Secondly, due to the slowdown of the epidemic and economic recovery, Baidu’s advertising revenue in its core business is also recovering rapidly.In addition, with the country’s 10 trillion-level investment in the new infrastructure, Baidu’s income in the AI ​​field will surely usher in an explosion.
Third, the United States has recently implemented quantitative easing monetary policy. The stock prices of listed companies in the United States have rebounded strongly in the past, so Baidu’s stock price should continue to rise in the future.This is also the reason why Baidu’s stock price has risen by 50% in the past two months.
Of course, we can’t judge the value of a company based solely on the financial report of a company, nor can we judge the future market value of this company.If you want to have a clear judgment on Baidu’s future development, you also need to analyze it from Baidu’s strategy, products, services, organization, talent, operations, management, etc., so as to have a more complete understanding of Baidu’s future.
02. Can Baidu still gain growth in its mobile business?
First, let’s analyze Baidu’s strategic layout.Baidu’s strategy is: “Consolidate the mobile foundation and win the AI ​​era.”Among them, Baidu’s current main source of income is mobile business (equivalent to cash flow business), including PC search and mobile search, as well as video, community, knowledge and tool services around traffic.AI (Artificial Intelligence) is a business that Baidu is vigorously exploring (equivalent to future star business). This is still in the investment period, which can be understood as Baidu’s “second curve” business.The core of Baidu’s strategy is to stay ahead in the mobile sector, ensure the stability of cash flow, and at the same time quickly deploy in AI to gain greater imagination.
Baidu CEO Li Yanhong’s understanding of “consolidating the foundation of mobile” is that Baidu wants to build an unprecedentedly prosperous and powerful mobile ecosystem.This powerful mobile ecosystem is not a simple “search + feed”, they are Baidu’s dual engines, but not all of Baidu’s mobile ecosystem.Mobile ecology means that the interdependence of the entire ecology is smooth, and it can incubate powerful products, useful functions, and good user experience.
Analyzing Baidu’s mobile layout, it can be seen that Baidu’s main practices are centered around Baidu APP, and the knowledge, video, community, and tool products are driven by the super traffic of Baidu APP.Then there are layouts in some vertical fields of content and commercial applications, most of which are Baidu’s own content platforms, and some are connected through investment to achieve subdivided content, such as Zhihu, Nutshell, and Uncle Kai storytelling, Netease Cloud Music, Pear Video, Youzan, etc.
Baidu mobile territory
Baidu attaches great importance to high-quality content. An important reason is that Baidu has always wanted to create an information portal, which also determines that they need more high-quality content.In the age of the PC Internet, Baidu has successively launched content products such as Post Bar, Know, Encyclopedia and so on. These products are still an important part of Baidu’s mobile ecology.In the mobile Internet era, “information islands” reduced the quality of content available to Baidu, so Baidu first launched a hundred brands to provide high-quality content for mobile, and then launched smart applets in 2018 to build a new content ecosystem.
So far, Baidu has accumulated more than 1 billion high-quality content in knowledge content including know, encyclopedia, and libraries.Baidu Encyclopedia is the world’s largest Chinese encyclopedia with 16 million entries; Baidu knows that it is the world’s largest interactive question-and-answer platform, with a cumulative number of questions and answers reaching 550 million; Baidu Library is China’s largest document sharing platform with more than 600 million online documents.In addition, Baijiahao has 2.4 million content producers, and its production content includes articles, pictures, short videos, etc.; Baidu’s intelligent applets have 300 million monthly active users, and the number of settled applets reaches 300,000.
As a result, Baidu has built China’s largest mobile ecosystem centered on information and knowledge.It can be seen from the layout of Baidu on the mobile layout that Baidu distributes content through dual engines-search and information flow on the one hand, and forms tens of billions of daily traffic distribution, on the one hand through Baijiahao and intelligent appletsA content ecology.At the same time, Baidu has also broadened the content dimension through strategic investment to meet the diversified content needs of more users, improve user satisfaction, increase user stickiness, and consolidate the mobile ecosystem with information and knowledge as the core.
Baidu’s investment in the mobile track in 2018-2019
For example, in the Baidu-invested project, knowing that it has 220 million users and 130 million answers, it is the domestic head knowledge question and answer community.After these contents are connected to the Baidu App in the form of smart applets, it not only broadens the ecological dimension of the Baidu App content, but also provides users with a wider range of knowledge content and enhances the user experience.Similarly, the access of Nutshell, Uncle Kai storytelling, Qi Mao novels, and NetEase cloud music not only meets users’ demands for entertainment content such as graphics, information, audio, video, and reading, but also enhances users’ stickiness to products.Increase user usage time.
Baidu wants to maintain growth on the mobile map. In addition to maintaining the stability of the search business, it also needs to expand its growth rate in the field of video and news, which is also the main driving force of Baidu’s content ecology.From a strategic perspective, Baidu has seen this trend, so it is actively working on the content side to obtain future sustainable growth.
With the conversion of Baidu search from web-side search to APP-side and smart terminal search, Baidu APP has accounted for more than half of Baidu’s revenue, and more and more advertisements are realized through Baijiahao and applets.In 2019, Baidu’s core advertising business has a total revenue of about 78.18 billion, a net profit of 22.8 billion, and a profit margin of nearly 30%.Assuming Baidu’s core advertising business revenue maintains a 10% growth rate for a long time, and the price-earnings ratio is not less than 12 times (both figures are relatively conservative), Baidu’s mobile business valuation should be no less than US$45 billion, higher than the currentThe market value of the entire Baidu.
In summary, as long as Baidu keeps the basics of the mobile business and maintains a steady cash flow, there is a chance for a turnaround.
03. Is AI commercialization expected?
If the mobile business is Baidu’s cash flow business, it is the foundation of Baidu’s standing, but in this field, because the competition is already relatively full, the development of this field can only be to maintain an advantage.If Baidu wants to restore the glory of the BAT era, the market value will increase more than 10 times on the existing basis, and Tencent and Alibaba shoulder to shoulder, you need to have breakthrough development in this field.
Why do you say that?There are two main reasons: the first is the general trend. In the future, the digital economy will usher in a wave of explosive growth. There are 10 trillion-level markets in which AI is the core driving factor of the digital economy.The second is comparative advantage. Now all major companies are working on AI, but Baidu has been working in this field for the longest time and has the most patents, which is more advantageous than other companies.A good strategy should meet three conditions: there are realistic market demands, enterprises have resources and technology, and differentiated competitive advantages.AI is all three for Baidu.
Through analysis of politics, economy, society and technology (PEST analysis), you will find that AI is a big trend.From a political point of view, the country has issued a series of policies on AI. In the new infrastructure launched in 2020, AI is one of the seven major parts.From the economic point of view, China’s economic transformation and upgrading, enterprises are facing digital transformation, and AI plays a brain role in digital transformation.From a social point of view, AI plays a very important role in the new coronavirus epidemic in 2020.From the point of view of technology, the application of various AI is becoming more and more mature, and has formed a complete industrial chain.
In December 2018, the Central Economic Work Conference was held in Beijing. The conference redefined infrastructure construction, and defined 5G, artificial intelligence, industrial Internet, and Internet of Things as “new infrastructure construction”, or “new infrastructure” for short.In the new infrastructure, artificial intelligence plays the role of the brain. There will be hundreds of billions of investments in this field in the future, and Baidu has an advantage in this field.In 2020, since the outbreak of the New Coronary Pneumonia, AI has shown its talents in medical treatment, distribution, and inspection. The “new infrastructure” has also pressed the fast-forward button, and the dual factors have superimposed, resulting in new opportunities for AI.The commercialization of AI has also begun to usher in spring. As a leader in the field of AI, Baidu has a lot of room for imagination.
Baidu’s new AI infrastructure map
AI will bring substantial economic and industrial structural impact at three levels, and Baidu has a layout at these three levels:
The first is the intelligent interaction layer, which corresponds to various terminal devices and application services. The main business model is 2C.In the era of the mobile Internet, smart phones and various APP applications are corresponding, but artificial intelligence and the Internet of Things will exceed the scope of smart phones, such as smart speakers, various wearable devices, sensing devices, and robots. This will inevitably lead to the entireThe industry was reshuffled.Baidu has an advantage in this field. The mobile terminal has more than one billion users. The small-scale speaker with interactive voice interaction has the largest market share in China. They are all AI terminal devices and applications.
The second is the infrastructure layer, which corresponds to 5G networks, cloud computing, big data, and AI. These infrastructures will eventually be opened and shared through the cloud service model. The main business model is 2B.Innovation at this level is not as obvious as the user terminal level, but the impact is very far-reaching.Overseas Google, Amazon and Microsoft have all made long-term investments in this infrastructure area, which is also an important foundation to support their market value of more than one trillion US dollars.In China, Huawei, Baidu, Tencent and Alibaba are all investing heavily here, and Baidu is known for its AI.
Finally, there is the level of industrial intelligence, which corresponds to the intelligence of specific industries such as transportation, medical care, cities, education, etc., and on the basis of intelligence, the mutual influence between these industries, their business models may be vertically integrated,There are both 2B and 2C components.The transformation of the industry by digital technology is mainly concentrated in personal information-driven industries such as information, retail, tourism, hotels, local life services and finance, but the intelligent economy driven by the Internet of Things and artificial intelligence includes not only personal information, but also physicalInformation, such as driverless driving, aggregates many innovation opportunities.Baidu, Tencent and Alibaba are all launching the Industrial Internet. The main idea is to use AI and other digital technologies to promote the transformation and upgrading of traditional industries.Among them, Baidu has advantages in digital technology in transportation, energy, education and other fields.
Baidu’s advantage in the AI ​​field lies in its early layout.Since 2017, AI, as Baidu’s new driving engine, has gradually penetrated into its various businesses. Whether it is search, content distribution, or intelligent driving, medical treatment, etc., it has been branded with AI.Based on the huge user data, Baidu can occupy an advantage in AI algorithms, so Baidu has been continuously adding infrastructure construction and continuously investing in artificial intelligence basic technology.Baidu has established more than a dozen cloud computing centers in China and invested 40 gigabit switches to provide important support for artificial intelligence technology and storage.The parameter scale of “Baidu Brain” has reached tens of billions, creating the world’s largest deep neural network.
According to the “In-depth Analysis Report on Artificial Intelligence Technology Patent” released by the China Patent Protection Association, Baidu ranked first in China with 2,368 AI patent applications in 2019, twice that of Tencent and more than 3 times that of Alibaba.
Baidu’s layout in the AI ​​field
Baidu has also built an AI industry ecosystem by investing in pan-Internet and AI companies.Among them, in September 2016, Baidu set up Baidu Ventures, with a fund size of more than 3 billion yuan, focusing on investing in early projects in the field of artificial intelligence; in October 2016, Baidu established Baidu Capital, with a fund size of 20 billion yuan, investing in Pan InternetMid-to-late stage projects.In April 2018, Baidu also established a growth fund with a capital contribution of US$500 million to invest in innovative companies in the pan-Internet and artificial intelligence fields.
Baidu has been using AI thinking to see the line. Around people and cars, Baidu has launched the conversational artificial intelligence system DuerOS, the self-driving car platform Apollo and Baidu cloud, which is also an important part of Baidu’s artificial intelligence commercialization.In the investment map of Baidu, the transportation field has always been favored by Baidu. Baidu has invested in related projects in the travel field such as Changsha Intelligent Driving Research Institute, VisualThreat, Huanyu Zhixing and Lunewave.Baidu’s investment in education also reveals AI thinking, such as Best Programming, Dolphin Thinking, and Snark AI.
From the perspective of market value trends, Baidu has greater imagination in terms of intelligent driving and connected vehicles.Compared with the year-on-year self-driving company Waymo, it had a valuation of US$30 billion in the last round of financing, which shows that investors are very optimistic about this field.Baidu has the world’s leading open platform for autonomous driving and the leading domestic Internet of Vehicles. At present, 400 models of 60 car manufacturers have a system equipped with Baidu. Both the technology and market influence exceed Waymo, which is reflected in the valuation of the capital market.There should also be a relatively large imagination space.
At the 2018 AI Developer Conference, more than 7000 AI developers and enthusiasts from all over the world witnessed the development of Baidu in the AI ​​field: the cloud full-function AI chip “Kunlun”, Baidu Brain 3.0, Baidu Smart Applet, DuerOS3.0 open platform, Apollo3.0 open platform, AR simulation, etc.This shows that a highly open ecosystem in Baidu’s entire industrial chain has taken shape, and the market has become more and more mature.
This change may be seen in Baidu’s financial report, and the revenue based on the AI ​​business has also grown rapidly, increasing from 11.7 billion in 2017 to 29.3 billion yuan in 2019, an increase of more than 150%.The global epidemic of new pneumonia in 2020 caused Baidu’s online advertising revenue to fall by 19% year-on-year, but other AI-based business revenues rose 28% against the market.The trade-offs, I believe that within a few years, Baidu’s revenue in the field of AI will exceed the revenue of mobile territory, thus becoming an AI-led company.
04. How to transform technological advantages into market performance?
Through the above analysis, we can see that Baidu’s business layout in the mobile sector is complete, and revenue growth is relatively stable; the technology accumulation in the AI ​​field has advantages, and the track where it is located has great growth potential in the future.From 2017 to the present, Baidu has invested more than 50 billion yuan in research and development, and the combined investment in the field of mobile ecology and AI has exceeded 30 billion yuan.Judging from the financial report, Baidu’s rapid growth in the AI ​​field also proves that the strategic direction is correct.
However, to transform technological advantages into market results, to transform R&D investment and investment into financial data, and ultimately to reflect market value growth in the capital market, Baidu also needs to continue to optimize in organization, talent, operations, and management to ensure strategyAble to land.
According to the strategic map model proposed by Robert Kaplan and David Norton, the most direct reason for a company’s long-term shareholder value is financial performance, including income, profit, cash flow, and return on investment. However, financial performance is often caused byCustomer value determines the company’s products, services, and brand.Supporting customer value is the company’s internal operations, including innovation, operations management, and customer management.Under this foundation, it is the company’s human capital and organizational capital, as well as the company’s leadership, values ​​and corporate culture.
Strategic map framework
Baidu’s first challenge is to optimize its products and operations.There is a saying circulating in the industry: Baidu’s technology, Tencent’s products and Ali’s operations.This sentence may not be very precise, but it can indeed reflect some problems. That is, Baidu is a technology company. There are advantages in technology, but there are still many deficiencies in products and operations.For quite a long time, Baidu’s core business is a search engine, and the main target customers are individuals. This business model determines that Baidu will focus more on technological innovation without spending too much time on product polishing and operation.More energy has shaped Baidu’s organizational capabilities and corporate culture over time.
Now Baidu’s business model needs it to work hard on content and AI.The content is mainly aimed at individual customers and has high requirements for product capabilities, which is where Tencent is strong; AI is mainly aimed at corporate customers and has high requirements for operating capabilities, which is where Alibaba is relatively strong.Baidu’s patents in the AI ​​field are ahead of Alibaba and Tencent, but the market performance in the AI ​​field has not yet fully burst out, which also shows that Baidu needs to be strengthened in terms of products and operational capabilities.If Baidu wants to win the competition, it needs to strengthen its organizational capabilities in these two areas.
Behind the organizational capabilities is the human capital of the enterprise.Baidu’s growth has been sluggish in recent years, and it still feels that Baidu is not attractive enough for outstanding talents.I have heard Baidu’s internal managers explain that the main reason is that technical talents are less dependent on platforms than product managers and operations managers. They are more likely to switch to another platform, or get support from investors to start a business.This reason can be justified, but it cannot cover up Baidu’s talent attraction and motivation issues.For example, both Lu Qi and Zhang Yaqin have been Microsoft’s global vice presidents. After arriving at Baidu, they did not play the expected value. Their departure was handled very decently, but it still felt a little regretful.
Strategies and organizations influence each other, and no matter how good the strategy is, it is difficult to land without the organizational capabilities that match the strategy. The core of organizational capabilities is high-performance managers.For example, Baidu saw tremendous potential in the O2O field, invested tens of billions of yuan, and ended up dismal.Judging from the choice of the track, Baidu’s strategic judgment is not wrong, Meituan’s current success proves this.Baidu’s failure on the Nuomi project has a lot to do with the lack of relevant leading talents, because O2O has very high requirements for operations. Without leading talents in this field, no matter how good the strategy is, it cannot be implemented.
When it comes to leading the echelon, I still can’t help but compare Baidu with Alibaba and Tencent.Ma Yun has retired and Ma Huateng rarely shows up, but this does not affect the growth of their business. An important reason is that these two companies have a “elevated general” leadership echelon, and most of these leadership talents are internally cultivated.There is a perfect talent training, selection and incentive mechanism behind it.But for a long time, Baidu seems to favor external star managers, and is more willing to attract talents with high salaries, but less willing to train and promote internal managers, resulting in high-potential talents within Baidu cannot come out over time.There has not been a leading echelon of “good generals”.
In general, Baidu has a very good strategic layout and certain advantages in terms of technology accumulation, but if you want to convert technological advantages into market advantages, you must make changes in organizational capabilities and corporate culture.It is a challenge to Baidu.
05. Baidu is starting a new Long March
The good news is that Baidu is undergoing positive changes.Analyzing Baidu’s changes in 2019, we found that Baidu is making significant adjustments in organizational structure, talent structure, and corporate culture, and the positive effects of this adjustment have begun to appear.
On January 17, 2019, Li Yanhong sent an email to everyone to release Baidu’s new vision: “Today, we have made such thinking and understanding clear as the company’s vision, that is: to become the most understanding user and help people growThe world’s top high-tech company. This is the first time Baidu has released its vision. These 24 words will carry on the new mission, show the company’s overall strategy of’tamp the mobile foundation, and win the AI ​​era’, anchoring Baidu’s new coordinates in the future.——Not only Baidu focusing on users and achieving others, but also a Baidu based on the world and making a difference!”
Soon after, Baidu began a major adjustment in organizational structure and talent.On May 17, 2019, Baidu released the first quarter of 2019 financial report. The financial report showed that it suffered its first quarterly loss since listing, and also announced the resignation of Baidu’s senior vice president and search company president to Hailong, as well as Baidu’s resignation.The search company has reorganized the “Mobile Ecosystem Group” (MEG for short).As the person in charge of Baidu’s core business, Xiang Hailong was once considered the “most unlikely” person.Xiang Hailong’s departure is a landmark event, which means that Baidu has begun to adjust its executives substantially.
Personnel changes often indicate changes in the company’s development attitude.In 2019, through intensive dispatch of troops, Baidu formed a new decision-making level of 1 (Li Yanhong) + 15 (VPs above VP).According to, 12 of the 15 executives are new executives, of which 5 are promoted internally, 3 veterans return, and 4 are externally introduced. These 12 individuals are all post-75-85.The average service time on Baidu is 8 years.Baidu has formed the youngest executive team in nearly five years.
At the communication meeting between Li Yanhong and Baidu MEG management on May 17, 2019, Li Yanhong also put forward three new requirements: First, ensure that the company is completely transparent, must tell the truth, must be transparent, and must not be cheatedSecond, re-evaluate some of the established practices, find new opportunities, and then have room for innovation to be able to do better than before; third, who benefits and who can’t solve the problem.Some things can’t be done by one person’s strength, and others don’t agree with you, then feed this matter back to the co-boss of the two people and let him make this decision. Will it work or not?These three points require that Baidu begin to adjust its focus on corporate culture.
The construction of corporate culture is the work of the HR department, but Baidu’s corporate culture has always been relatively weak, causing Baidu to retain people and become “Internet Huangpu Military Academy.”In order to change the corporate culture, Baidu invited Cui Shanshan, a former entrepreneur, to come back as the new HR vice president. She joined Baidu in 2000, and she is very affectionate to Baidu. In the words of Baidu insiders, it is “I want Baidu to be good.””It is appropriate for her to promote changes in corporate culture.
At the meeting of the directors of Baidu on July 11, 2019, the theme of the speech of Cui Shanshan, the vice president in charge of HR, was “Improving organizational capabilities and starting a new Long March.” Facing Baidu’s core management, Cui Shanshan said bluntly: “Leading figures are responsible for performance, and those who do not do well, do not manage well, and do poor performance must pay for poor performance.”
Gerstner, who once saved IBM, believes that the secret to rejuvenating a company is culture and performance.In his words, “Company culture is not just an aspect of the game-it is the game itself”, then performance is actually the rule of the game.In order to better change the corporate culture, Baidu also quickly switched the company’s performance assessment method from traditional KPI to OKR.
Li Yanhong once criticized the company’s KPI culture in the email: “If you use a simple mechanical KPI to decompose and pass down, then it is likely that when the grassroots to the front-line employees, he does not understand why we should do this.. At this time, if his mind is not user experience, not market demand, but how can I complete this number, then this company is really over in a long time.”
This kind of KPI performance evaluation index leads to asymmetric information within the company, the supervisor and employees cannot communicate correctly, and each employee has its own role, and rarely aligns with each other; the management plays to make the data look goodSmall movements, but also make talent identification problematic.What’s more serious is that because KPI emphasizes the company’s performance too much, no matter what the realization path is, whether it is harmful to the user experience and the company’s brand, it leads to a serious distortion of values.Some of Baidu’s crises in the past have been more or less related to the distortion of values ​​caused by this KPI.
Baidu has implemented OKR for more than a year so far. The most important role is to implement concentricity.OKR is visible both horizontally and vertically. Everyone in the company knows what Li Yanhong’s OKR is, the director knows what the VP’s OKR is, and employees know what the department head’s OKR is, so that the company’s strategic goals can be nested layer by layer., Layer by layer alignment, is conducive to improving efficiency and reducing waste of resources.
06. Enlightenment from the transformation of Tencent and Microsoft to Baidu
Any change requires a certain amount of time to produce results.It is too early to judge whether Baidu’s transformation is successful.But observing the transformation of similar companies after experiencing a crisis may inspire Baidu’s future.
The first company worth learning is Tencent.The reason why Tencent is compared with Baidu is because Tencent has also experienced a severe reputation crisis.In the “3Q War” in 2010, although Tencent won the lawsuit against 360 at the time, the brand image was also seriously hurt.Tencent’s corporate culture was once introverted. They focused their energy on users and products. When they saw what products were popular, they imitated them, and then used their own traffic advantages to crush their opponents.At the same time, because Tencent has little communication with external experts, media and peers, and Tencent is also misunderstood by Tencent, leading to poor market reputation.
In 2011, Tencent organized a group of external experts to “diagnose Tencent” and gave Tencent a lot of sharp opinions.Under this external stimulus, Tencent also began to become more open.This kind of opening is not only the opening of the corporate culture, but also more open in the strategic layout. It is no longer like seeing an opportunity to go and do it yourself, but to invest in excellent companies in the industry and seek symbiosis by empowering them.At the same time, Tencent began to adjust its organizational structure to make the organization more strategic.Under the new organizational structure and corporate culture, Tencent has hatched phenomenal products such as WeChat and launched the Industrial Internet in 2017.These series of strategic layouts and organizational changes have also increased Tencent’s market value by more than 20 times in 10 years and become an ecological enterprise.
Tencent’s stock price changes in the past 10 years (Oriental Fortune Network)
Another company worth learning is Microsoft.Microsoft used to be the king of the PC era, and it has been deployed very early in the Internet era, but it seems that it has not done particularly well. It has also missed the opportunities to acquire Yahoo, Google, and Facebook. Some people even said that Microsoft missed the Internet competition.At that time, Microsoft’s corporate culture was also relatively bad, the internal struggle between the departments was fierce, the morale within the company was low, and a large number of excellent talents left.Against this background, Microsoft’s revenue has stalled, and its share price has been declining all the time. Its market value once fell below $70 billion.
Fortunately, Microsoft is eyeing the cloud computing trend, because this business is growing fast.Satya Nadella, who is responsible for the cloud computing business, became the new CEO of Microsoft in 2014.After serving as the CEO of Microsoft, Satya Nadella began to “refresh” Microsoft, not only to adjust Microsoft’s strategic focus to cloud computing, but also made drastic changes in corporate culture, making the entire enterprise more executive., Also makes Microsoft innovation come alive.Along with this change, Microsoft’s stock price has risen more than 6 times since he took office, and on June 22, 2020, the market value reached 1.52 trillion US dollars, becoming the world’s second largest technology company after Apple.
Chart of Microsoft’s stock price changes over the past 10 years (Oriental Fortune Network)
As can be seen from the examples of Tencent and Microsoft: a company that has encountered a crisis and has stalled in growth can still restart growth, but the premise is to choose the right strategic direction, gather excellent talents, refresh the corporate culture, and enhance organizational capabilities.This is what Baidu is doing. We can’t predict whether Baidu’s future market value will usher in more than 10 times growth, but at least it is on the right path again.
Where is Baidu’s future?Perhaps Xin Qiji’s poem contains the answer: he searched for thousands of Baidu in the public, and looked back suddenly, but the man was there, the lights were dimmed.The place where the lights fall is also the sea of ​​stars.
Reference materials:
Pan Chao: “Baidu is refreshing: 40,000 people start a new Long March”
Finance: “Baidu promotes the performance change of all employees, what is Li Yanhong’s OKR?》
Zhongguancun Interactive Marketing Lab: “Internet Advertising Development Report 2019”
Phoenix: “Is Baidu underestimated?”》
Author | Chen Xuepin, founding partner of Wisdom Cloud, strategic consultant and president coach of many high-growth companies.
Edit | The wisdom cloud board of directors, positioned as the “outer board of directors of high-growth companies”, is committed to enhancing entrepreneurial leadership and helping companies grow rapidly.

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