On the new year’s day of 2022, “ten questions about Noah” was launched. This rare article in the financial industry takes introspective questions as the core content, and truly faces and responds to the key issues in Noah’s reform. Wang Jingbo, the leader of Noah, gave a detailed answer to the first question: Why did Noah change.
Recently, Wang Jingbo sent an internal letter of more than 10000 words to internal employees, which was widely spread in the wealth management industry. Due to its authenticity, introspection and valuable discussion, it triggered heated discussion and thinking in the industry. How should the wealth management industry change? What is the avenue of industry transformation and development? How can we focus on customers and continue to create value? The views in the letter have aroused resonance among practitioners and investors.
The following is the full text of the internal letter (excerpt):
professional achievement and caring heart
In 2021, Noah comprehensively launched the reform from “end-to-end” service of financial planners to “iron triangle” mode service of customers, and promoted the reform of the basic law from “commission driven” to “qualification, assessment and coordination oriented” of financial planners. The process is not easy, but good results have been achieved and customer satisfaction has been greatly improved.
Change starts with myself. In the Spring Festival of the year of the tiger, I have this idea to write my own cognitive iteration in promoting change into a verbatim draft.
I. professional achievement and caring heart
Noah’s transformation starts with “knowing yourself” and knowing your niche. Noah will be positioned as a “one in a hundred” wealth management company focusing on serving high net worth customers in the future. We should always maintain our awe of the financial industry and respect industry common sense. Noah should change from “product driven” to “customer-centered, survival based and professional people-oriented”.
Noah’s new brand connotation is: above wealth, see the wisdom of life, achieve the heart of love with professionalism.
Today, all colleagues of Noah, especially the front-line 3R, believe that they will better understand what is meant by ” professional achievement and caring heart “. The meaning of saying this today is different for us.
In 2021, Noah has healthy income, no debt and record profits, which represents that we have certain cognitive advantages.
The so-called advantage and success is the ability to constantly bypass the trap. The advantage of the company is never that it does not make mistakes or encounter risk events, but the ability to cross risks. It’s not luck that didn’t step on the thunder, but because of some ability constructed by cognition.
I believe in this sentence: when we encounter an obstacle, it means we are destined to this obstacle. Some people have no luck with some obstacles. For example, you can’t cross a big river, but the eagle doesn’t feel the river because the river doesn’t pose an obstacle to it.
The real cognitive advantage is not to fall into the obstacles that most people think are obstacles.
Noah started its business in 2005 and went public in 2010. Noah has remained sober in the process of industry development, coupled with our profound reflection after encountering risks. With the gradual maturity of industry supervision methods, we choose transformation and reform early.
However, our understanding is not fully in place. Although we have insight into the wealth management industry and strong willingness to survive, we still don’t know how to break through. Until a few months later, exposure to Huawei’s “crisis management” opened a window for us.
2. Looking back on 2021, I divided it into two paragraphs: before June 30 and after June 30
Before June 30, 2021, while loosening the soil with the idea of change, we are nostalgic for the glory of the past, retain the operation mode of the past, and make careful preparations to fight an ended war under the impetus of inertia. Our explicit pursuit is still performance, elite financial planner and scale.
We have the right insight into the future, but we haven’t kept up with it in action. We have experienced risks and maintained a certain soberness, but we haven’t become stronger. Because we haven’t really changed, we still focus on the optimization of past advantages in our comfort circle. Firmly ending yesterday’s war is what we should do.
After June 30, we firmly ended yesterday’s war.
We understand that only by breaking through the limit can the ability circle become larger. After June 30, 2021, the speed of change began to increase, but the “challenges” also accelerated. I realized once again that it was very difficult to build the new Noah’s Ark smoothly.
In 2021, the wealth management and asset management industry has undergone paradigm transformation. The industrial changes, business ecology and characteristic positioning are different from those in the past. The industry has ushered in an inflection point in the evolution of business model. Because of Noah’s choice in the past and current competitive position, we can only firmly promote reform and use a more advanced management model from strategy to implementation, It is possible to break through the competition.
Industry inflection point I think in the following four aspects:
1) supervision cycle: the loose cycle ends and the sales orientation becomes the past;
2) product cycle: assets migrate from real estate to public funds, embracing the era of great rights and interests;
3) competition pattern: take “customer thinking” instead of “sales thinking” as the origin;
4) investors and practitioners gradually mature, and the industry growth brought by the aging population and the growth of residents’ wealth.
Third, ignorance is bliss, and cognition is pain
The bottom of Noah’s reform is Shanghai New Culture Media Group Co.Ltd(300336) : Noah people must have the spirit of pursuing the truth. The company should build such a soil to provide a stage for people who are willing to learn for life and pursue the truth. By making these people succeed, the company can grow.
Noah wants to solve the problem, not to pursue the fundamental problem. Why is there such a problem? What is the essence of this problem? Without the pursuit of truth, many questions may have no answers.
Over the past 18 years, Noah has promoted its business through product driven means, and products are our engine. We use products to serve our customers, which also conforms to the development of the wealth management industry.
Today, Noah proposed the transformation from “product driven” to “customer-centered and survival as the bottom line”. We may need a new business hypothesis to understand customer needs, lead customer needs and create value for customers. For the process of value creation, re identify and distribute according to value creation. The process of value creation is centered on customers and their customer experience. The new business assumptions bring new enlightenment and requirements to Noah’s operation and management. The interaction between the company and customers has become the core place for us to create customer value.
For Noah, we need new business capabilities. We need not only the interaction between the financial planner and customers, but also the company’s organizational ability to interact with customers in a three-dimensional and matrix manner.
Noah’s reform first promotes the organizational management model, from linear management of business division system to matrix management; From the one-to-one service of financial planner to the service of iron triangle model; Taking the team and city as the new minimum unit economic model, serving customers and establishing a new incentive mechanism with examination and evaluation are all from linear management to matrix management, from individual elite, individual leadership to organizational ability.
“Matrix management” means using two lines for management. Compared with linear and division based management, matrix management adds a dimension. It is not parallel or coincident with the existing dimension, but increased. The efficiency may be slow, but because there are more angles and dimensions, the amount of information, accuracy and quality should be better.
Drucker said, “management” is to get rid of all links that do not create value and optimize the links that create value. I think this is similar to Huawei’s “one hole in strength and one hole in benefit”.
The core of Noah’s culture is to respect the market; Then it is to understand human nature, create value, identify value and distribute value; Firmly implement the underlying basic ideas in management, integrate knowledge with practice, and practice words with practice.
Fourth, cognition is change – only by changing cognition can we promote change
It is very difficult to recognize common sense, and it is very difficult to maintain awareness of events against common sense.
Human cognition is the invisible hand of the whole human evolution. Noah’s change is essentially a process that Noah must go through to improve their overall cognitive level. If we can’t face it, invest energy to persuade and promote with action, and let the team build new cognition, the possibility of change failure is very high. From historical experience, the probability of success of change is very low.
In addition to cognition, the challenge of change is to build new capabilities. In the past, people who operated Noah, from founders to core executives, need to build new capabilities. Only by building a new understanding of ourselves and knowing who we are and where we are can we truly become understanding people.
The goal and direction of change are generally clear, but the best way to get there has not been found, so we still need to take small steps, run fast, correct and try and error. Huawei is willing to explore and learn more. We need more curiosity and patience to keep the best path empty. In the past, Noah’s product driven model was only fast. We believe that “fast and scale” can take away many management problems. Now we learn from “Huawei” and want to “win first and then fight”. This is a long-term and continuous process.
Munger said that the biggest benefit of his early study of physics, biology and meteorology was to “avoid becoming a hammer”. It means that when you hold a hammer in your hand, everything you see is a nail. When you have only one hammer in your toolbox, you can only solve the problem in a single way. Over time, you really become a hammer.
Cross border learning from Huawei essentially allows Noah to have enough tools in his toolbox, while avoiding unlimited tools. Because this is a toolbox, not a tool warehouse. There is an internal relationship between the tools in the toolbox. Its complexity ultimately comes down to simplicity – the simplicity of solving a specific problem. This is “the complexity of the starting point and the simplicity of the result”.
Huawei’s management model, LTC and quantity upon listing are actually based on a management philosophy, “I go all out for the simplicity of the result; I scoff at the simplicity of the process”. In the process of promoting change, we must make trade-offs. The process has become longer and the efficiency has become slower, but we have more full discussion, more dimensions and higher quality.
For these perceptions, the management should establish consensus, pull through and align, and grasp the “degree” in the process.
As practitioners of wealth management and asset management, we should protect the wealth of our customers in any environment. This largely depends on the customer’s asset allocation and investment portfolio. It is where Noah should give full play to its professional ability and achieve a caring heart with professional achievements .
February, 2002
Jing Bo Wang
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