How Tencent used ‘micro-innovation’ to make WeChat a success

The following is an edited excerpt from Micro-Innovation Strategy: The Case of WeChat, a study by Xiaoming Yang, Sunny Li Sun and Ruby P. Lee. Their 2016 paper was published in the Asian Case Research Journal.

Tencent has had a long tradition in innovation strategy. During the development process of WeChat, the company adopted a strategy called micro-innovation, a term that Google’s former Vice President, Kai-fu Lee, brought up in an interview. Micro-innovation has three unique characteristics that make it different from incremental innovation.

First, micro-innovation is subtle and adaptive. Products are developed based on previous versions or other similar products and thus, degrees of innovation are incremental rather than radical.

Second, 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.

Third, micro-innovation requires a significant amount of interaction between a product and its users. WeChat has gone through multiple stages of micro-innovation to come to this point.

The processes behind micro-innovation

First, because most ideas in regard to micro-innovation originated from the lower levels of the company, a flat structure could facilitate information flow. In practice, any department that brought in the most profits attained the highest privileges and the strongest influence in innovation strategy and activities in the organization.

However, substantial influence of innovation strategy by a particular department could be detrimental to an organization’s long-term growth and profitability. Tencent had done a great job of decentralization. As the cash cows of Tencent, the wireless system department and the interactive entertainment-system department were not allowed to exert any influence on the development of emerging departments.

Products such as WeChat were developed totally independently from the wireless system and interactive entertainment-system departments. Innovative activities were afforded a high degree of freedom and were not affected by their short-term performance.

Tencent iterated and upgraded its various mobile social products in their own fields. Zhang Xiaolong, the founder of WeChat and the manager of Tencent’s R&D Center in Guangzhou, believed that mobile QQ met users’ need for synchronous communication, and that Tencent’s microblog met users’ need for asynchronous communication, while WeChat, with greater flexibility, allowed users to manage social relations and interpersonal communication at their will.

Hence, in order to successfully conduct micro-innovation within an organization, a company should establish a standalone unit
that is separated from its relationship with other existing dominant businesses to avoid unnecessary interference.

Small teams

Breaking norms and established procedures and making bold attempts have been the most notable feature of micro-innovation organizations; thus, micro-innovation could never be accomplished in a research center or on a factory assembly line. Successful micro-innovation requires implementation by a capable and vigorous small team.

When developing WeChat, Zhang Xiaolong did his best to keep the development team small. If the team became too big, he divided it into several autonomous small groups. At the same time, cooperation among team members was kept simple to maintain members’ initiatives and enthusiasm.

Similarly, micro-innovation is not performed in a rigid step-by-step manner. The iteration of micro-innovation was so frequent that it was impossible to know how a new version might look in the next two months. As a result, all past experience could become obsolete for future development. Any procedures based on past experience could make development teams neglect current changes surrounding their product and constrain cognitive learning ability.

In fact, the process of micro-innovation was contradictory to that of standard manufacturing. While large companies tend to react slowly, small companies can respond quickly to any uncertainties. Thus, small teams that operated in a large organization could avoid streamlined and rigid steps that could hamper innovation activities.

Dynamic management

Competition in the mobile Internet industry has always been intense and any competitive advantage and market monopoly that resulted from micro-innovation could be temporary. Great ideas might emerge at any time and consumers expected to see new products or features frequently. To sustain a competitive advantage, companies must establish yet continuously modify their goals to overcome dynamic market changes.