Tencent’s Innovation Strategy

1. Introduction

  • 2000, introducing Mobile QQ, QQ mail, QQ Games, and qq.com
  • 2004, listed in Hong Kong Exchange
  • 2005, introducing QQ Space (blogging) and QQ Music
  • 2011, instead of making a mobile version of its desktop instant messaging software QQ, Tencent introduced the smartphone App WeChat. In little more than a year, WeChat achieved 100 million registered users
  • 2013, WeChat introduces WeChat Pay, users can link their bank account to WeChat Wallet, and send and receive money from other users
  • 2014, entering the banking business by founding WeBank
  • 2015, entering the entertainment sector by founding Tencent Penguin Pictures, which features entertainment programmes, movies, and tv-series
  • 2016, founding of insurance platform WeSure as well as Tencent Music Entertainment Group for music streaming
  • 2017, launch of WeChat Mini Programs, which enables users to use Apps without downloading and just by scanning a QR code
  • 2018, more than 1 billion active WeChat users, mobile pay handles more than 1 billion daily transactions

2. Background: The Chinese Market

The Chinese Internet Market

The Chinese Smart Phone Market

Support from Chinese Government

3. Innovation and Innovation Strategies

Definition of Basic Terms

Factors that innovation strategies must take into account

The context of innovation and innovation strategy in China

Different kinds of innovation strategies

  • Prospector organizations focus on locating and exploiting new market opportunities. They try to reach technological leadership through risk-taking in new products.
  • Defenders want to maintain a stable share of the market. They want to maintain the efficiency of established products or services, while remaining flexible enough to pursue new business activities. For efficiency, they require centralization, formal procedures, and discrete functions.
  • Analyzer corporations share characteristics with both prospectors and defenders. They often monitor the actions of leaders with a more cost-efficient product.
  • Reactor organizations do not have a systematic strategy, design, or structure. They do not make long-term plans, because they see the environment as changing too quickly.
  • Imitative innovation mainly focuses on imitating technologies, products and processes of the innovation leader. One way to achieve this is to import technologies from advanced countries and incorporate them in native products.
  • Collaborative innovation aims towards research and technical cooperation relations with other enterprises, universities and research institutions. Collaborative innovation includes the long-term cooperation with strategic intents, such as strategic technology alliances, network organizations and also includes the short-term co-operation for a specific project, such as research and development contracts, and license agreement.
  • Independent innovation is a process to achieve unique core technology with independent intellectual property rights and to realize the value of new products. Independent innovation includes: original innovation, integrated innovation and re-innovation after introduction and absorption.

4. Tencent’s Innovation Strategies

Imitative Strategy

Collaborative Innovation

Independent Innovation

Business Diversification

Micro-Innovation Strategy

  • It is subtle and adaptive. Products are developed based on previous versions or other similar products. As a result, degrees of innovation are incremental rather than radical
  • The cycle of micro-innovation is short and the process is repetitive. Firms are required to ceaselessly iterate each step to produce the best outcomes and each new version must be short in order to obtain feedback from users and improve products almost instantly.
  • Micro-innovation requires a significant amount of interaction between a product and its users

5. Conclusion

Sources

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Ren & Heinrich

Ren & Heinrich

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