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2023.11.30 06:59
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Unveiling PDD: How did it surpass Alibaba in market value?

What makes PDD so strong? Why has it become so powerful? The combination of "strength + competition" forms the wolf pack of PDD. However, while execution is a necessary condition for PDD's success, it may not necessarily be a necessary condition for the success of Alibaba and JD-SWR.

Original Source: Yu Dongqi Business Notes

Last night, PDD briefly surpassed Alibaba in market value and became the largest Chinese concept stock in the US stock market.

Combining these two days, Jack Ma affirmed PDD's achievements in the past few years within Alibaba's intranet.

We witnessed this historic moment together.

It used to be widely believed that the e-commerce field already had Taobao and JD.com, making it difficult for another giant to emerge.

Until PDD came out of nowhere.

In just 8 years since its establishment, today its market value is equivalent to several JD.coms and briefly surpassed Alibaba.

The key is that the number of PDD employees is only a fraction of JD.com and Alibaba.

(As of Q2 2023, PDD has 13,000 employees; as of the end of 2022, JD.com's employee count exceeded 550,000; as of June 30, 2023, Alibaba had 228,675 employees)

In the community group-buying field, PDD also defeated Meituan in less than three years and achieved a larger market scale.

It is now a consensus that PDD is strong at this stage.

However, what I am more curious about is what makes PDD so strong? And why can it become so strong?

I have searched many articles and materials online, but I have not found a satisfactory answer.

So, I communicated with many friends who have worked at PDD and fought alongside PDD on this issue.

In their eyes, PDD's main strengths lie in "high-quality decision-making" and "strong execution."

These two factors form an efficient combination.

From the outside, PDD appears like a pack of wolves:

Once a new opportunity is discovered and the top-level strategy is determined, the team can quickly adjust within a few days or even hours, following the instructions of the top-level management, resolutely implementing the strategy, and rapidly capturing the market.

Once the market approaches its limit and is almost exhausted, PDD's core team will decisively leave and move on to the next new hunting ground.

It is this pack of wolves mentality that allows PDD to quickly succeed in various businesses such as e-commerce, community group-buying, and cross-border e-commerce.

Among these two abilities, "decision-making ability" mainly comes from the individual capabilities of superbrains like Huang Zheng and Abu.

The "strong execution" that supports the implementation of top-level decisions is a point that countless companies desire but only PDD has achieved to the extreme. PDD's Strong Execution Power: How Does It Come About?

In the eyes of many, PDD's execution power is truly formidable. So, this article aims to explore how PDD's strong execution power is formed and why most companies cannot achieve the same level of execution as PDD.

The article will be structured as follows:

  1. How strong is PDD's execution power?

  2. From an employee's perspective, why is PDD's execution power strong?

  3. Behind execution power - driving teams into a state of healthy competition

  4. The essence of PDD's strong execution power - healthy competition under a strong authority

  5. Why can't other companies achieve PDD's execution power?

Note: Due to the length of the article, this piece will focus more on the organizational level. There will be a sister article in the future that analyzes from a strategic and business perspective. Stay tuned. This article is 15,567 words long and will take approximately 39 minutes to read.

01 How strong is PDD's execution power?

A conversation I had with a friend from PDD left a deep impression on me and made me realize just how strong PDD's execution power is.

In a typical company, when we say a team has strong execution power, we usually refer to two aspects:

First, team obedience, where the will of the top management is implemented.

Second, team effort, where work is done quickly, efficiently, and in large quantities.

Although PDD's strong execution power also encompasses these two points, the degree is on a different level.

Let's start with team obedience.

In most companies, if we want the team to be obedient, we usually emphasize "execution." However, at PDD, there is a term called "rigid execution."

Rigid execution means absolute obedience without negotiation.

What does this "rigid execution" encompass for the team?

It includes following the strategic and critical strategies set by the top management.

It includes obeying the plans sometimes proposed by managers.

It includes complying with any adjustments to your responsibilities made by managers.

At PDD, the following situations often occur:

In most companies, teams are organized by departments, with product teams sitting together and operations teams sitting together.

But not at PDD.

To ensure efficient communication between upstream and downstream businesses, PDD often arranges for product, operations, research, and testing teams in a specific direction to sit together.

This arrangement has an impact on the team. Although a product manager's position remains the same, if they are assigned a different task, they have to move their workspace.

At PDD, it is common for managers to decide that something else is more important, inform the person involved on the same day, have a brief handover, and move to a different workspace the next day.

Such adjustments frequently occur at PDD.

Moreover, there are even more extreme cases.

In 2020, PDD started doing community group buying, which required conducting business in various provinces. This necessitated the appointment of "provincial leaders."

These "provincial leaders" are responsible for a specific province and are stationed there.

The majority of these appointed "provincial leaders" are PDD's own employees.

However, there is a problem - PDD's headquarters is in Shanghai.

Before engaging in community group buying, these employees worked in the Shanghai office.

If they were assigned to be a "provincial leader"... For employees, it means not only doing something they have never done before, but also leaving Shanghai and being sent to an unfamiliar province.

I can personally feel how difficult this is.

When I was recruiting before, I tried to offer higher salaries to Shanghai employees to move to Beijing, but very few people accepted because the living conditions in Shanghai are really good.

Moreover, many "provincial leaders" who do community group buying will be sent to less developed provinces.

With such a big change in their lives and work,

Normally, these "provincial leaders" should have to compete for the positions, right?

We should see who is willing to participate in the competition and then decide who will go. Otherwise, what about their families and children?

But at PDD, most of these "provincial leaders" are directly appointed by senior management.

After being appointed, most of them will accept the position.

The appointed "provincial leaders" will have a few days to recruit key managers under them within the company. Once the recruitment is completed, they will immediately leave Shanghai and fly to the target province.

Then, they will start the intense process of finding warehouses, goods, and group leaders, and launching their operations.

They may not have the opportunity to go home for a long time in the future.

There are companies that emphasize execution.

But it is indeed rare to see companies that demand such absolute obedience.

Now, let's talk about team efforts.

PDD has been working 996 since its establishment.

There is only one day off per week, and the remaining workdays require working for more than 12 hours a day.

On release days, they may even have to work overnight.

In a normal company, if the team works such long hours, people will definitely be tired and unable to think clearly.

The number of bugs in the development team will increase, and the creativity of the operations team will decrease.

However, PDD is able to effectively convert the working hours of its employees into productive work.

In the case of community group buying, they have a proud achievement: while their competitors spent six months on a technical project, PDD used a smaller team and completed it in just three weeks.

According to friends who have worked at PDD, in community group buying, they have warehouses where they need to pick and pack goods and deliver them to group leaders.

They compared their own efficiency with the main competitors and found that the labor productivity in PDD's warehouses was 1.8 times higher than that of other competing products.

PDD's growth team has also achieved top results in the industry.

One claim is that PDD and ByteDance's growth capabilities rank among the top three globally.

PDD's performance also validates this claim. Whether it is PDD (e-commerce), Duoduo Maicai (community group buying), or Temu (cross-border e-commerce), PDD has achieved steep growth curves.

PDD's short video platform also surpassed 150 million daily active users in less than two years.

It is difficult for a team to maintain long working hours without a decline in work quality and still be able to unleash creativity.

It is even more difficult to achieve both absolute obedience and proactive efforts.

The reason is simple:

Obedience and proactive efforts are inherently contradictory. We need our employees to be proactive, hardworking, and take responsibility for the results. If you want me to take responsibility for the results, then you should listen to me and not impose your own ideas on me.

If the boss continues to exert pressure and demand obedience from the team,

The team may accept it on the surface, but deep down they are very dissatisfied.

Everyone will think: Who should do it, you or me? You are not on the front line, how can you come up with good results just by guessing?

However, PDD has managed to achieve this.

Not only does the team follow the manager's instructions, but they also treat the manager's tasks as their own and work hard to create surprises.

This is the dream state for managers.

How did PDD achieve this?

02 From the perspective of employees, why is PDD's execution so strong?

With doubts in my mind, I had a serious discussion with some friends from PDD to understand the logic behind it.

The first question is, to achieve such strong execution like PDD, employees must be very miserable, so why are so many employees willing to join PDD?

My friends told me,

The reason is simple, because they pay well.

How well do they pay?

The starting salary is high.

For example, when PDD was just starting its community group buying business, HR set up camp right outside Xingsheng Youxuan.

They offered double or triple the salary to attract talent.

That's the starting salary.

What's even more exciting is the annual salary increase.

Many companies usually give a 7% or 10% salary increase at the end of the year.

But at PDD, the salary increase far exceeds this norm.

PDD's performance is rated on a scale of 271, with 20% being excellent, 70% qualified, and 10% unqualified.

In his experience, if a PDD employee scores 70%, their monthly salary will increase by at least 10,000 yuan.

The top 20% will receive even more.

One year, someone scored in the bottom 10% and their monthly salary increased by 7,000 yuan.

This means that as long as you work at PDD for five or six years and achieve normal performance, your annual salary will be at least one million yuan.

As a result, leaving PDD to switch to another company usually means taking a pay cut.

When it comes to salary, PDD follows a basic principle:

People work to make money, so if you want employees to obey and work hard, you have to pay them well.

Even the "governors" sent out for community group buying are not completely unable to refuse. If you really don't want to go, you can refuse or even resign.

But why are most of these employees in Shanghai still willing to become governors in other places?

Because they are really well paid.

At PDD, if a new project is successful, all participants will receive huge rewards the following year.

Not only will their salary increase significantly, but they will also receive a large number of stock options and year-end bonuses.

Of course,

When the company first proposes a new project and makes such promises, many colleagues still don't believe it.

After all, few companies are willing to immediately offer such a large amount of money as a reward for the team.

However,

Before starting the community group buying business, PDD had another new project called "Kuai Tuan Tuan".

Kuai Tuan Tuan was the company's first promise of rewards for a new project. At first, everyone was skeptical.

But in the second year, the company fulfilled its promise and delivered huge rewards.

So when the community group buying business was launched, a large number of people in the company enthusiastically signed up.

Even HR and finance said they wanted to be "provincial governors" and do business.

But signing up didn't make a difference.

For the "provincial governors," the majority of them were still directly appointed by the company.

For these first and second-level managers who the company wanted to be "provincial governors," the conditions given by the company were: if they went to the community group buying business, they would receive full bonuses, stock options, and salary increases.

But what if they didn't go?

The company still held the power, and if they disobeyed the company's orders and chose not to go, their salary increase would be reduced to zero.

Indeed, the root of PDD's execution lies in their willingness to spend money.

Money is the driving force behind obedience and hard work.

But the problem is, money doesn't necessarily move everyone.

So, the second question is, why are PDD's employees so receptive to financial incentives? Why are they willing to work hard without a personal life and absolute obedience just to make money?

A friend told me:

Because PDD has always been selective, only those who are willing to make money, accept high pressure, and absolute obedience can stay.

Before joining the company, he knew that although PDD offered a lot of money, the pressure was also great, which was different from other companies.

However, after joining, PDD exceeded his expectations. Almost from the first day of joining, PDD showed him how different it was.

For example:

• On the first day of joining, he saw that everyone in the team worked until after 11 o'clock at night, and he also left work at that time. He thought it was a release day, but when he asked people around him, he realized that it was just a normal workday, like this every day.

• On the first day of joining, there was no normal familiarization period for work. He received a task directly and had to submit it the next day.

• After completing a proposal and submitting it, if the proposal was somewhat important and was reviewed by the company's management, there was a high probability that it would be completely changed. And there was no explanation for why it was changed, he had to implement the modified proposal. He really wanted to find a way to explain how he had considered it at the time and why the previous proposal was better. But the management would not give him the opportunity to explain. - The decision-making management, in essence, is Abu.

Unlike most other companies, where new employees have an adaptation process after joining,

PDD tells you what PDD is like and what PDD wants right from the start.

As a result,

In a very short time after joining, he quickly understood what the company wanted:

Both 996 working hours and a continuous state of hard work.

And absolute obedience to the will of the managers.

The result is that those who want to make money and can accept absolute obedience and high-pressure execution stay.

Those who don't accept it will leave quickly.

Therefore,

When outsiders see PDD's team, it is both unstable and stable.

The instability lies in the high turnover rate in the first month of joining.

But once employees accept and adapt to PDD's requirements after the first month, they often become stable and can work at PDD for several years. At the same time, at PDD, there are occasional compliance tests to implement the will of the senior management, allowing the team to experience that the will of the senior management is absolutely not to be violated.

One thing impressed him--

PDD is in charge of lunch.

Normally, lunch should start at 12 o'clock.

At 12 o'clock, everyone can enter the dining room and get their own lunch with their name on it.

However, during the actual delivery process, the supplier may deliver it earlier, for example, it may be delivered at 11:30.

Some people would go in early and look for their lunch before 12 o'clock.

One day,

Abu saw this and became furious: It should be working hours before 12 o'clock, how can you eat?

The next day, HR put up a warning line at the entrance of the dining room, prohibiting anyone from entering before 12 o'clock, and only allowing entry after 12 o'clock.

There was another time when Abu received feedback from an overseas user.

It was midnight at the time, and he immediately woke up everyone involved to solve the problem.

This process was both a way to screen people and to repeatedly establish the authority of the senior management.

Gradually, the team accepted the absolute authority established by the senior management.

To what extent does this authority become strong?

One time, there was a dispute between the product and the R&D team over a collaborative standard issue, and they couldn't reach an agreement. One person brought up a principle, saying "Abu said it."

Everyone immediately stopped talking and followed the instruction.

In the face of the demands and will of the managers, obedience became the only choice.

03 Behind PDD's strong execution - driving the team into a state of healthy competition

As mentioned earlier,

If you offer enough money, you can indeed attract enough outstanding people.

Screening people can indeed identify those who can absolutely obey and accept long working hours.

However, long working hours alone does not necessarily mean high work efficiency.

Employees may slack off, and managers may not necessarily know.

(1) So, how does PDD ensure that everyone can maintain high efficiency during such long working hours?

A friend from PDD told me that indeed, some people would take a break during release days or when they have to work overnight, but they cannot do it regularly.

On the one hand, for positions like R&D, the work is divided by the managers. PDD's managers are very strong, and when dividing the work, they will ensure that your workload is reasonable.

On the other hand, competition is always waiting for you.

If you take a break while others don't, not only will your income be affected by poor performance, but the managers will also make you feel uncomfortable.

Joining PDD is the beginning of competition.

For employees, the outcome of the competition directly affects salary increases and year-end bonuses.

For managers, once a certain module performs poorly, competition will directly make the managers lose their territory.

And PDD will let competition radiate to everyone, almost all the work.

For stable jobs, business results are the direct criteria for the horse race.

For occasional important issues, when it is not entirely certain who can solve them or what the best solution is, if conditions permit, they will also be resolved through a horse race.

Of course, behind each horse race, there are huge incentives.

For example: In the case of Duoduo Maicai, the "Provincial Manager" appointed by the headquarters may or may not be suitable for community group buying.

How do we identify them?

After the rapid expansion phase of the business, PDD directly organized a horse race.

The horse race is conducted between the "Provincial Managers" and only a few business indicators are considered.

For several months, the winning "Provincial Manager" directly merges the failed manager's business, while the losing manager is transferred back to the headquarters.

For example:

At this moment, Temu is facing significant warehouse management problems due to rapid business development.

PDD doesn't know the fastest and best solution at the moment, so they set the indicators and have several executives each manage a warehouse to compete.

This resulted in the Winter Jujube Warehouse, Grape Warehouse, and Watermelon Warehouse (Winter Jujube, Grape, and Watermelon are the nicknames of PDD executives).

Competition has become a mechanism that drives all employees to continue to strive.

However, competition does not necessarily lead to strong execution.

Many companies also have competition, but in the midst of competition, a lot of actions can become distorted.

For example, I know of a certain large company that has competition and also eliminates the last place.

But in order to win the competition, employees will perform in the group chat - secretly saying "someone's ability is not good" or "let me help you with a certain project," implying that their own abilities are stronger than the other person's.

The result of competition largely depends on "acting".

If intense competition forces the team to focus solely on meeting KPIs, it can be more terrifying as it harms the business in the long run for short-term gains.

(2) So, the next question is, how does PDD ensure that employees' competitive actions are healthy under the pressure of competition?

A friend said: First of all, "acting" is useless. At PDD, competition is only based on business indicators.

Business indicators are extremely simple and do not allow for any other tricks.

For example,

The most critical KPI for the business team often consists of just one or two indicators.

For example, for procurement, different procurement managers are responsible for different categories, which theoretically do not have comparability.

However, PDD assesses the procurement team based on "the relative increase in GMV and profit for each category".

This immediately aligns the standards.

As for the R&D team,

The R&D team supports the business as a whole, and their assessment is based on workload and the number of issues. At PDD, every task and every line of code has a clear person responsible, making it possible to quickly hold them accountable.

Moreover, PDD's assessment is not based on general business indicators, but on business indicators under predetermined resources.

In other words, many companies only look at the results and not the costs when assessing, which results in teams continuously expanding, and even each small leader having redundant resources to validate new ideas.

Without setting assessment goals and limiting resources, it is also impossible to put everyone in a long-term, highly efficient state where work drives them.

At PDD, what matters is the effect under limited resources, in other words, labor efficiency.

Therefore,

For each individual, resources are fixed, and data is objective. If you want to perform well, you can only work hard.

So, relying on "acting" or hoping to win the competition at PDD by getting more resources is basically impossible.

Secondly, if you want to meet KPIs, it is also very difficult to have the opportunity. Because the executives at PDD pay close attention to details, they know exactly where you have problems and where the business has issues.

How closely do they look?

In the community group-buying sector, Abu appointed a "provincial governor" for each province, and almost all of these dozens of "provincial governors" are competent and outperform the externally recruited "provincial governors" who were offered high salaries.

This shows that Abu has a thorough understanding of these dozens of individuals.

Now, Dongzao, who directly manages the Temu business, can provide precise individual feedback to the dozens of people who report to him at meetings.

Whether it's Abu or Dongzao, they are both well-versed in various data.

Abu even personally tracks user feedback.

For a long time, Abu will personally review all the launches.

And PDD's launches usually happen in the late night, which means the team has to work overtime. As long as your module is launched today, no one dares to go home and sleep.

Because every step of the launch is assigned to a specific person.

If there are problems after the launch, or if Abu discovers certain issues and he is still around while you are sleeping or not in the office?

No one can imagine what kind of situation they will face the next day or what kind of anger Abu will unleash.

Therefore, on the day of the release, Abu doesn't go home, and no one dares to go home.

Due to the senior management's understanding of the majority of business data and details, almost any unhealthy action or KPI manipulation is unlikely to escape their attention.

Therefore, KPI manipulation is almost impossible at PDD.

(3) The next question is, even if there is competition, what if the competition is not focused on what really matters? What if the team excels in individual metrics but overall business efficiency is still low?

A friend said:

This is where PDD's bosses are the most impressive.

At PDD, basically everything that everyone needs to do, where resources should be allocated, major strategies, and principles are all determined by the bosses.

On critical issues, the team must simply obey, and judgment is left to the managers.

And the bosses have a clear understanding of what is most important.

All resources are invested around key processes, and competition revolves around key metrics.

This ensures that the best resources are used where they matter most.

However, during the process, some new opportunities may inevitably arise, and some strategies may need adjustment.

When managers realize that a strategy needs to change, they will make decisive adjustments.

And the state of rigid execution by the team ensures that when a manager wants to make adjustments, their will is fully implemented.

As a result, competition among employees always revolves around the most important aspects of the business.

Moreover, PDD's bosses have also realized that they should try to minimize the energy and time employees spend on meaningless tasks that are not directly related to output.

For example,

When the Temu business reaches a certain stage of development, there will be key milestones to monitor and overall strategy adjustments to synchronize on a monthly basis, so monthly meetings are held.

At the beginning of these meetings, everyone who needs to present instinctively prepares documents, and the more they write, the longer they become, hoping to make a good impression on the managers.

This leads to a wasteful expenditure of energy. So, Temu's leader, Dongzao, directly limited the time for each person at the meeting.

Writing documents is useless because no one reads them.

Many low-value tasks discovered by PDD have been eliminated one by one by PDD managers, reducing wasted energy for employees to the minimum.

For example:

• No meeting without problems, no need to write meeting materials, and no need to spend time on meetings.

• Non-essential documents are not written. Some R&D employees have been with PDD for three or four years and have never made a PPT.

• When writing requirements, try to avoid original solutions and avoid drawing "prototypes" as it takes too much time. Just take screenshots of the competitor's pages and annotate them.

• Fewer management levels and sufficient flatness to ensure that too much time is not spent on information transmission. Moreover, the instructions that were originally passed from top to bottom are rigidly executed.

• Because there is a competition mechanism based on simple indicators, even the semi-annual salary increase and performance review are compressed to within 10 minutes. Managers basically just inform the results.

Of course, these mechanisms are also implemented as absolute obedience instructions throughout the company.

(4) The last question is, isn't authoritarianism the enemy of initiative? Since everything is determined by managers and employees need to rigidly obey, won't authoritarianism undermine autonomy and make employees lose their initiative in competition?

A friend said: Actually, it won't.

When he first started working on a few proposals, he was also not used to it - the proposals he submitted were always completely changed.

He also wondered if the managers really understood the perfect proposals he made when they made changes.

He wanted to ask, but no one explained.

However, after a while, he realized that no matter how the managers changed the proposals, they were only adhering to a few strategies behind the scenes:

• Consumer first.

• Efficiency first. If functions can be reduced and launched quickly, then launch quickly.

• Low price. In most cases, do not increase costs for consumers.

These strategies have been firmly and thoroughly adhered to by the managers for many years.

Looking back, these strategies are particularly reasonable.

It is also these strategies that have brought success to PDD.

But when he didn't understand it at first, it was really uncomfortable.

For example, one time he submitted a proposal, thinking that the proposal should be more comprehensive so that the operation for merchants could be simpler.

As a result, when it was submitted, all the parts that considered the convenience of the merchants were deleted.

Later, he learned that in PDD, as long as the merchant's ability to make money is not affected, it doesn't matter if the merchant is troubled. It is better to let the merchant be troubled and launch as soon as possible.

This strategy, in retrospect, is very reasonable and understandable.

However, when encountering it for the first time, it violated the professional habits of most people - in our previous work experience, we were always required to consider the balance of multiple parties' benefits and make the proposal more comprehensive.

This conventional requirement in other companies contradicts the basic principles that PDD bosses adhere to.

Therefore,

Many people misunderstand PDD simply because they fail to understand the logic behind PDD. These people will say, "PDD is a strong authority, the management decides everything, and employees are not given autonomy."

These people will also leave PDD.

However, in his opinion and the opinion of many employees who stay at PDD,

he believes that "PDD is actually the most empowering company."

Because,

as long as it does not violate the few major strategies insisted upon by the bosses, the rest is almost all up to the team's discretion. As long as you can achieve results, there is actually a lot of room for creativity.

Moreover, he gradually understands why managers directly change plans without explanation.

Because most of the time, explanations are useless. Those who can understand will understand sooner or later, and those who cannot understand will still not understand no matter how much you explain.

However, explaining at least makes the team feel better.

In this regard, PDD's choice is that the company will not pay any cost for your feelings, but the money will definitely be given.

A large part of this money is to pay for your feelings.

So, I understand:

Although the instructions from PDD's top management require absolute obedience from the team,

the top management of PDD actually knows where they can exercise authority and where they cannot.

What can be enforced?

• Allocating resources and determining what is important and what is not.

• Adhering to major strategies, otherwise the business will lose.

• Avoiding serious issues such as harming users or online problems.

However, the decision-making power for specific plans still belongs to the team.

The team is still responsible for their own results.

As a result, the team will actively find solutions, and when they find a better approach, they will also experience a sense of achievement in winning competitions and increasing metrics.

The team's initiative and creativity are guaranteed.

I also understand that before starting a new project, PDD does several things:

First, the boss understands the business logic and clarifies key strategies.

Second, determine who will do it.

Third, the boss communicates intensively with the team and goes through all matters until a consensus is reached on the major strategies and basic principles.

When everyone understands and agrees on the major strategies, efficiency naturally increases.

The rest is left to the team to execute.

By allowing the team to compete healthily within the key strategic scope defined by top management and eliminating all waste in the process, PDD achieves a state of efficient daily work for the team.

04 The Essence of PDD's Strong Execution Power - A State of Healthy Competition Under Authority

I know that many founders of companies also hope to have the strong execution power of PDD, but often fail to achieve it.

The instinctive approach of these founders to improve team execution is to make demands: demanding working hours, demanding that employees must complete certain tasks.

However, this approach usually does not yield good results.

The main reason is that,

employees on the front line face different specific situations every day, and managers find it difficult to accurately judge the difficulties and workload of each task. Even if they demand working hours, managers cannot know whether employees are truly working efficiently during those hours.

In other words, on one hand, the boss cannot accurately assess; on the other hand, the boss cannot monitor everything. In places where the boss cannot see, the team will slack off.

Therefore,

In order to improve execution, employees need to compete with each other, and those who have first-hand information should push each other to work harder.

The goal is to transform employees' work from a limited game of "meeting management requirements" to an unlimited game of "winning against each other".

This is also the logic behind PDD's strong execution.

Many companies have realized this logic and try to stimulate employee competition through performance evaluations such as 271 or 361, and larger performance bonuses.

However, the results of most companies are far from being as good as PDD's.

The reasons are twofold:

On the one hand, as mentioned earlier, their execution is not as thorough as PDD's. They are not as willing to spend money and are not as determined to screen out people who meet their standards.

On the other hand, besides employee competition, there needs to be a "framework".

This framework should define the goals of employee competition and ensure that these goals ultimately lead to the company's victory.

It is also important to ensure that employees' goals are clear, simple, and stable. The simpler and more stable the goals, the more conducive they are to competition.

Furthermore, competition must occur in a healthy manner.

Therefore,

The two elements of PDD's execution orientation are "competition" and "authority".

Competition becomes the driving force behind employee motivation.

Authority sets the boundaries for competition and defines its direction.

We say that it is relatively easy to learn from PDD in terms of giving money, screening people, and setting performance targets.

However, after communicating with more and more people from PDD, I realize that the most difficult thing to learn from PDD is:

PDD has drawn a clear, explicit, and stable framework for all employees.

It is because of this clarity and stability that the team can summarize the principles of consumer first, high efficiency, and low prices, which are upheld in high-level decision-making, through repeated experiences.

These principles also apply to many specific business strategies:

What kind of products can be sold on Temu? What kind of goods can be included in Duoduo Maicai?

These principles are also formed by the top management and clearly communicated to each team, which ensures stable execution by the teams.

Moreover, PDD's top management only implements the strategy without explaining it.

For employees to understand the strategy and find their own room for development, it takes time and relies on the stability of the management's strategy.

Furthermore,

PDD has tens of thousands of employees. In order to ensure that these employees focus on more important matters and do not engage in unnecessary activities, tasks need to be divided among different levels of managers.

For example, in the R&D team, PDD's front-line developers mainly write code.

Task division and allocation are all done by grassroots managers.

This places high demands on technical managers.

For business teams, managers also need to understand the company's strategy and implement it, ensuring that the front-line employees execute according to the company's strategy without deviating.

This places high demands on business managers as well.

This framework above competition needs to be established by top management and executed by managers at all levels, so that it can ultimately influence the daily behavior of employees. So here's the question.

Why do the top executives at PDD have such accurate and stable strategies?

And how does PDD have so many excellent managers?

Challenge 1: How do the top executives at PDD form such accurate and stable strategies?

The abilities of PDD's top executives, Huang Zheng and Abu, go without saying. In the eyes of the employees, they are very good at "seeing the essence."

Bosses who can see the essence also delve into the details of the business and gather sufficient information, ensuring the quality of the strategies.

There are two key reasons that ensure the decision-making quality of PDD's top executives:

(1) Prudent decision-making.

The top executives spend more time discussing, researching, and thinking before taking action.

In their view, PDD's bosses have two states: before making a decision, they spend a lot of time researching and discussing; after making a decision, they invest all resources, mobilize the entire team into a startup mode, and execute at the fastest speed.

For example, before entering the community group-buying market, Abu and Huang Zheng had a long discussion and debate about whether or not to do community group-buying.

(2) Restraint and focus.

Although it seems that PDD has many businesses today, in fact, PDD has always been doing one thing: low-priced, high-frequency, essential retail business.

It just does the same thing from e-commerce to the kitchen, from domestic to international.

When the decision-makers themselves are capable, restrained, and focused on doing only one thing, their abilities and experience will continue to accumulate, and the quality of decision-making will become higher and higher.

It is said that when Duo Duo Mai Cai became the market leader, PDD's executives reviewed all the major strategies of Duo Duo Mai Cai, and the final conclusion was that the only strategic mistake of Duo Duo Mai Cai was "doing it too late." Apart from that, there were no mistakes in the major strategies.

Just like when Temu's team reviewed Temu's strategies so far, the conclusion was also that there were no mistakes in the major strategies.

As a result, such quality of strategies not only ensures strategy stability and provides a stable execution environment for the team but also builds stronger confidence in the top executives after each victory.

Although the top executives do not explain themselves, the team is always more willing to understand and recognize the strategies that will bring success.

So when asked to obey, they become more decisive and more convinced.

Challenge 2: How does PDD find managers who can implement the will of the top executives, effectively delegate tasks, and lead the team with strong execution?

Just like with employees, there is screening and competition.

Moreover, the evaluation of the management is based solely on performance and results.

There was once a young employee who had just joined PDD. He achieved first place in his team's performance for three consecutive months and was promoted to be the manager of the team in the fourth month.

Even though he was the youngest person in the team, other members had more experience and were older than him.

After becoming a manager, the evaluation criteria remained performance.

It just shifted from individual performance to team performance.

As long as he can lead the team to achieve performance and avoid major mistakes (such as finding a problem during Abu's inspection and then going home to sleep), he can continue to work in the management position. On the flip side,

If someone becomes a manager and the team's performance declines for several months in a row, they will be immediately removed and returned to being a frontline employee.

The selection criteria for these managers determine that they must be individuals who are absolutely obedient and capable of leading the team to achieve results.

In the end,

The managers at PDD who are selected in this way generally have several characteristics: clear logic, strong business capabilities, assertiveness, and recognition of PDD and familiarity with the boss's strategic requirements.

However, it is worth mentioning that in general companies, in order to promote someone to a managerial position, they must at least possess some basic management skills in addition to performance. In many foreign companies, it takes several years for an employee to be promoted to a managerial position.

But why is PDD able to rely solely on performance when promoting these younger individuals with less management experience to managerial positions?

The reason is that,

The rigid execution of the company as a whole, the atmosphere of strong obedience, and the competitive mechanism greatly reduce the difficulty of management for each manager.

At PDD, as long as the manager has strong business capabilities, they can lead the team to achieve results,

and they do not need to be good at persuasion, empathy, or know how to communicate with employees.

Because at PDD, the people who remain in their teams have long accepted the state of strong obedience and strong competition.

Competition among managers is also driven by competition among peers.

However, the competition among managers, in addition to focusing on performance, also revolves around territory.

Once a manager is responsible for a certain area and encounters underperforming results or unresolved problems,

other managers will propose to their superiors: "I have an idea that should be able to solve this problem."

The superior manager also wants to solve the problem.

They will immediately say, "Okay, this matter is now yours."

For each layer of management, once it is discovered who may have a better approach to a certain problem, responsibilities can be changed immediately without the need for communication, and it takes effect immediately.

The state of strong execution and absolute obedience gives managers great flexibility and freedom.

For frontline managers, if they see that they are not doing well in any aspect, they will immediately lose their territory. On the other hand, if they have confidence in doing better than others, they will immediately gain territory.

This almost instantaneous feedback mechanism of competition makes the competition among managers more intense than that among employees.

In the end, managers at all levels have completed the implementation of the boss's strategy and supported the execution framework on the front line.

To summarize, I understand that PDD's strong execution system actually operates as follows:

• The bosses have a clear understanding of the overall strategy and what is important. At the same time, the bosses themselves personally adhere to the core strategy.

• On matters that the bosses have a clear understanding of, everyone can only obey without any room for negotiation. Obedience or lack thereof becomes the criterion for screening employees, and those who do not obey can only leave.

• Absolute obedience also gives the bosses the flexibility to quickly adjust their strategies.

• Under the overall strategy, specific plans and work are delegated to the teams.

• Each layer of management, and even frontline employees, compete intensively within the framework of the strategy set by the bosses, making competition the main driving mechanism for everyone. • Because PDD is willing to pay, it has a continuous stream of excellent candidates and makes money a powerful motivation for competition among employees. Moreover, PDD always conducts rapid screening - selecting employees and managers who accept and adapt to this system.

• The bosses also immerse themselves in the business, interact with users, analyze data, and personally inspect a large amount of work to ensure that the team executes without problems.

• The bosses lead by example, working overtime and directly resolving user issues even late at night, ensuring that everyone is always under high pressure.

In the end, this simple, effective, and interconnected system is faithfully executed by PDD.

This is what creates PDD's strong execution capability.

05 Why can't other companies achieve the same level of execution as PDD?

The principles behind PDD's mechanisms are not difficult to understand, but why can't other companies achieve the same level of execution?

If you have run a business or managed operations, you will know that what was mentioned above is almost against human nature for managers:

First, the demands for managers' persistence and effort are against human nature.

• Having stable and clear strategic capabilities is difficult. This is also challenging for PDD, so their choice is to not be greedy and focus only on low-cost, high-frequency, and essential retail business. Even for a powerful company like PDD today, they still choose not to venture into businesses that may have opportunities but they are not confident in. However, human nature itself tends to be greedy, so restraining and suppressing the impulse of greed goes against human nature.

• Managers who immerse themselves in the front line will also work harder. Many people aspire to become managers because they think that being a manager means they don't have to do the actual work themselves, making it easier. However, managers need more information and their decisions have a greater impact. Being a good manager is much more tiring than being a good employee. Just like PDD's execution capability, it is achieved by the management team leading the execution together. It is said that every morning at 8:30, the executives meet with Abu in the café downstairs to discuss the day's work, have breakfast, and then officially start working. They often have to finish the acceptance of the release version and can only leave work in the early morning, maintaining a 16-hour workday for a long time. Such hard work requires a sustained battle against human nature.

Without these two points, employees cannot enter a healthy competitive state.

Constant changes in rules and multiple goals are not conducive to competition.

Unstable performance indicators and large room for interpretation can lead to internal deception and are also not conducive to competition.

Second, persistently making choices that are better for the business, not caring about criticism or the temporary feelings of employees, also goes against human nature.

People are afraid of conflicts, and it is inevitable to feel bad when being criticized. However, PDD's choices are almost always business-oriented, and they don't care about how much criticism they receive.

• The choices regarding people are against human nature: In most companies, new employees are given a honeymoon period to allow them to gradually adapt to the pressure and understand the situation. As a result, some people work for half a year before realizing that it is not suitable for them. This also aligns with the acceptance process of most people. On the other hand, PDD chooses to expose their true selves from the beginning and does not package themselves, quickly filtering out those who do not accept it. It is inevitable that some people who do not understand this process may criticize PDD for having a cold onboarding process for new employees. However, PDD is extremely firm in knowing what kind of people they want, and they are not afraid to offend people or endure criticism. • On every level of decision-making, the decision-making power is not delegated, which is quite unusual. In most companies, employees are given opportunities to develop and take on higher-level tasks in order to help them grow. However, in reality, these attempts beyond the employees' capabilities often result in low-quality outcomes and a waste of resources. PDD, on the other hand, chooses not to give employees such opportunities and instead assigns tasks based on their hierarchical level, which goes against the conventional way of employee growth in many companies.

• Employees can be promoted or demoted instantly, which is very counterintuitive.

• PDD prioritizes business success above all else and is willing to solve any other problems by throwing money at them, regardless of how it may negatively affect employees. This is also very counterintuitive.

Thirdly, being willing to spend money is even more counterintuitive.

PDD requires employees to give up rest and work overtime like crazy; it requires them to step out of their comfort zones and embrace change; it requires them to give up a significant degree of autonomy and accept authority.

All of these requirements go against human nature. In order for the team to accept such demands, PDD must be willing to spend money. Higher demands can only be achieved through financial investment.

However, for most bosses, being willing to spend money goes against their nature.

Because only when they understand what they can gain by spending money, can they actually do it.

Each of these points goes against conventional management practices and also goes against the nature of managers or employees.

Therefore, most companies cannot implement this mechanism as firmly as PDD does.

But why can PDD do it?

After understanding PDD's execution mechanism, what I perceive is the strong desire for success from PDD's bosses.

True desire is not just saying "I want it" but being genuinely willing to pay a huge price for it.

PDD's bosses have an immense desire for success and have a clear understanding of what they must persist in to achieve it. They do not harbor any illusions and are willing to do what needs to be done and pay the necessary price to create such an execution system.

As long as they have a clear understanding of what they want, closely monitor their goals, and are not hesitant when it comes to paying the price, the formation of systems and capabilities is only a matter of time.

And just like business, company management is a combination of strategies that can continuously find better answers through optimization.

This is actually a necessary condition for the success of any company.

Therefore, PDD's bosses dare to make decisions that go against conventions and human nature.

Going against conventions means taking risks and possibly facing criticism.

Going against human nature means that managers, who are already working hard, have to bear the punishment from human nature as well.

However,

This is necessary for PDD to achieve business success.

One statement from a former PDD employee left a deep impression on me -

He came from a small village and made it to a big city.

The reason he chose to join PDD after graduating from university and rejected other offers was because he felt that the experience at PDD was great.

I was also puzzled.

While I only worry about the quality of products on PDD, why does he think the experience at PDD is good? Where does the phrase "user experience" come from?

He said: When he first went to college, his classmates told him to shop online.

He went on Taobao and found that a pair of shoes cost hundreds or even thousands of yuan.

He wondered: Why are they so expensive?

Because in his impression, a pair of shoes should only cost tens of yuan.

Later, on PDD, he saw shoes that cost tens of yuan again.

This is what he had in mind, the kind of shoes they could afford.

Now I understand.

The reason why PDD needs to squeeze the execution power of its employees to the limit.

It's because low prices are their core user experience.

For Taobao and JD-SWR, they can easily cover the team's costs by allocating a small portion of the marketing expenses for shoes that cost hundreds or thousands of yuan per pair.

But for PDD, when a pair of shoes only costs tens of yuan, how much profit can be made to support a large team?

Therefore, execution power is a necessary condition for the success of PDD's business.

But it may not necessarily be a necessary condition for the success of Alibaba and JD-SWR.

So, PDD chose to focus on "execution power".

However, every new "focus" is bound to come at the cost of "abandoning" something else.

Just like how PDD chose to give employees higher salaries in order to enforce obedience, motivate them to work harder, and attract talented individuals.

This is a simple business principle: focus on the main contradiction.

However, most companies, unlike PDD, are not as thorough and resolute in grasping the main contradiction and abandoning the secondary ones.

But it is precisely this determination that allowed PDD to seize the opportunity in the gap between Alibaba and JD-SWR, and emerge in a race track that most people thought had no opportunities.

Before communicating with friends from PDD,

Because I had long known that PDD's work intensity is likely the highest in the Chinese internet industry, I thought many people would criticize PDD when talking to friends from PDD.

But to my surprise, most people who have worked at PDD for several years, rather than just one or two months, speak proudly and enthusiastically about PDD.

Their speech speeds up involuntarily.

As one friend put it: "Working at PDD is like having your body in hell and your soul in heaven."

Why is that?

Because at PDD, the evaluation criteria are extremely unified, stable, and simple, relying solely on performance to speak, so there is no room for office politics.

For most employees who want to get things done, the most frustrating thing is having their achievements taken away and their plans disrupted by those who engage in office politics.

The environment eliminates such space, and although the pressure is high, it becomes unprecedentedly pure and simple.

Because of the high quality of the management's strategies and the strong execution power of the team, the team constantly experiences victories, and victories become a source of motivation. For the team, although they are just soldiers, they have experienced one victory after another, won one remarkable battle after another.

As for the work experience, they would say: PDD only gives money, there is no other experience besides money.

But then they would turn around and say: This is reasonable, they understand the choices made by the managers, understand that their business requires strong obedience, understand that explanations are useless, and understand that the core strategies must be adhered to by the managers. A PDD-born entrepreneur once said that the biggest gain from PDD is the strategy of hiring one person, paying for two people, and making them do the work of three people. It's simple and effective.

They would say: In fact, giving money is the greatest goodwill a company can show to its employees.

06 Summary

Looking back, I think PDD is a very unique company.

Although the elements that make up PDD's execution power are simple: authority + competition.

Authority helps managers draw the development direction of the company with a grand strategy, becoming the guiding framework for team efforts and competition.

Competition, on the other hand, turns the team into a driving force for each other, transforming the execution state from a limited game of simply completing manager's instructions to an unlimited game of competing with each other.

However,

Other companies do not execute as thoroughly and resolutely in all aspects as PDD does.

Whether it's the strategy of being willing to pay money, quickly screening people, or the manager's restraint in strategy.

As a result, many of the strategies that contribute to PDD's strong execution power have become the source of misunderstanding from the outside.

I can see that PDD's management mechanism has many unconventional and even counterintuitive points.

But they conform to many simple business principles, such as "grasping the main contradiction" and "putting the user at the center."

And each unconventional and counterintuitive point implies a huge cost that the PDD management team has to pay.

The reason why PDD can achieve extraordinary success,

An important reason is that PDD's bosses have figured out what they want.

And they are willing to pay the price and continuously optimize for it.

In the end, I can see that although PDD is unique, it shares many common traits with successful companies of our time:

For example, finding ways to attract excellent people.

Establishing mechanisms for competition and drive among employees.

Having the flexibility to adapt and adjust quickly to changes.

Insisting on prioritizing business success.

In these aspects, Meituan, ByteDance, and PDD are no different.

They just chose different solutions.

And PDD, which emerged from a corner that was originally considered impossible, faces unique challenges.

I believe it has found the optimal solution that suits it best.