Wang Donglei Shares: How to Do Disruptive Innovation?

　　The "23rd China-Foreign Management Government-Industry-Academia Forum" was held in Beijing from November 1-3, 2014. The theme forum "How Chinese Enterprises Can Achieve Disruptive Innovation" — Wang Donglei, Chairman and CEO of NVC Lighting, attended the conference. What are the disruptive technological and commercial revolutions in the lighting industry that Wang Donglei discusses?

　　Regarding the situation of new traditional industries in the era of disruption, disruption is a favorable disruption. When we look at the leadership of traditional industries in the era of disruption, there are two key words here: first, disruption; second, leadership. Let's discuss them separately, starting with disruption.

　　Host: First of all, I would like to ask Mr. Wang Donglei. Lighting is a very traditional industry. From when Edison invented the light bulb until now, the light bulb has not changed essentially. With such an industry that has not changed much for over 100 years up to today's era, do you think there is a disruptive force in this industry at the present stage? As Andong said at the opening, someone suddenly appears outside the door. Who is this force? Where is it?

Wang Donglei: The lighting industry is indeed facing a disruptive technological revolution—namely LED technology, the disruption of traditional lighting technology by semiconductor technology. One of my chairmen works in LED. What do people in the lighting industry see this as? Crossover. This is what we call the disruption of an industry by disruptive technology. Today, as a traditional lighting company, NVC's LED sales account for about 40% this year, and should basically reach over 90% by 2017 to 2018. The entire traditional lighting industry has been disrupted by LED. That is one point.

What is the other disruption? It is the disruption of the business model—the disruption of traditional industries' business models by the mobile internet era. For example, NVC's more than 3,000 exclusive stores across the country will face transformation through mobile internet O2O technology—we must take this step. These are two disruptions.

Host: You mentioned technological disruption. The principles of light bulbs are very different from Edison's time. You are precisely using new forces to disrupt the traditional forces of the lighting industry—this is technological disruption. You mentioned earlier what may interest and concern everyone more, namely the disruption of the business environment and business model. Indeed, you mentioned this, and I would like to ask you: the fact that NVC Lighting has been able to become a leader in the industry is largely due to its offline channels. In the mobile internet era and the O2O era, could this reliance on offline channels become a hidden concern for NVC? When you further transform this situation, will the offline channel partners, with whom you once shared close bonds, become a burden to you?

Wang Donglei: Regardless of the era—the internet era, the platform e-commerce era, and so on—in fact, retail. Retail accounts for half of NVC's sales. What is the essence of retail? We must see it clearly. Therefore, for the future path of NVC's 3,000 stores and their O2O transformation, the core is to grasp retail. More than ten years ago, when every company had a logo, we began; today we are doing O2O. As an entrepreneur, first, seize the opportunity and identify the direction; second, have conviction—meaning accurately see retail—and then use various tools to improve and transform an industry.

Host: The development of an enterprise must be backed by a very persistent and very realistic plan. First, protect your health and keep a balanced mindset; second, maintain an appropriate distance from the team. For us, when an enterprise reaches a certain level, breakthrough development is very important. As for disruption—the previous guests talked about how they disrupted themselves; we dream of disrupting others. Mr. Wang said at the beginning that he was actually an outsider to the traditional lighting industry—a "barbarian"—and he disrupted it. Now Mr. Wang plays an important role, having disrupted NVC's original ways. In the future, this will increasingly become the new normal, and exchanges between our industries will become more frequent, with mutual entry and mutual disruption. In this new normal, when a disruptor enters a traditional industry to build a new venture, I believe Mr. Wang has his own pressures. In your opinion, in such a situation, what advice would you give to other friends who are willing to disrupt industries?

Wang Donglei: So-called leaders — in modern leadership, or leaders in our enterprises, whether in the physical realm or the virtual realm — first and foremost it comes down to the ability of the enterprise, or the person, or the team you lead to adapt to the market. If you have this ability, and the enterprise and team have this ability, then you can become a leading enterprise in this industry, and you won't fear being disrupted by anyone; then you will become the disruptor.

Our acquisition of NVC was a vertical integration of upstream and downstream — we didn't want to disrupt anyone, but unforeseen circumstances arose and disruption did occur — my apologies. So when financial media treats financial events as entertainment hype, we also feel uneasy. NVC, as a leading player in traditional lighting, is indeed facing tremendous transformation in the industry, highly transformative technology, and in addition, highly transformative business models driven by mobile semiconductors — if these two are not handled well, there will be major problems. But the problems aren't as big as people imagine. As someone who came through the door as a strong outsider, looking back now at the outsider team and the traditional lighting team, viewed from today, in the Chinese lighting market, those who can become leaders in the future are probably still these traditional lighting companies, which hold greater promise — of course, these companies are expected to have an internet mindset, an open attitude, and to swiftly embrace new technologies to transform themselves. If they achieve this, I believe their traditional market advantages will continue to exist. Therefore, the leaders of any traditional industry have no need to feel inferior, nor any need to panic — steady your breath, settle your mind, and take it one step at a time; that is the right way.

Doing the right thing at the right time is forever a discipline that all of us corporate leaders — indeed, leaders of every kind — must continuously cultivate. Today, in this time of just under 90 minutes, we have exchanged views on truly timely topics, and I believe that everyone here — on stage and in the audience — will find themselves more easily and gain a better future in this era of disruption.