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W37354

BOE: LEVERAGING KNOWLEDGE MANAGEMENT FOR ENTERPRISE

DEVELOPMENT1
Jingjiang Liu, Shimei Jiang, Ning Su, Qiqi Zhu, Qingwen Zhang, Hua Tian, Shuohua
Xu, Changran Zheng, Hui Cao, and Li Liu wrote
this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling
of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.

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This publication may not be transmitted, photocopied, digitized, or otherwise

reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered
under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact
Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected];
www.iveypublishing.ca. Our goal is to publish
materials of the highest quality; submit any errata to [email protected].
i1v2e5y5pubs
Copyright © 2024, Ivey Business School Foundation

Version: 2024-08-06

tC

On May 23, 2023, Display Week, a prestigious global display event hosted by the
Society for Information
Display and known as the “Oscars” of the industry, kicked off in Los Angeles,
United States.2 At the event,
BOE Technology Group Ltd. (BOE) made a prominent appearance, showcasing a range of
leading
technology products for the first time and capturing the attention of countless
attendees. The company had
grown from an electronic tube factory on the verge of bankruptcy to become the
world’s largest
semiconductor display manufacturer in just 30 years. Currently, the total shipment
of BOE’s displays
ranked first in the world, and its market share in five major mainstream
applications and many innovative
applications of display screens led the global market.3

No

However, this did not mean that BOE’s growth path had been smooth sailing. The
influence of the display
industry cycle, the need to improve profitability, and the company’s transition to
the Internet of Things
(IoT) had presented significant challenges for BOE. Therefore, in its development
process, BOE had to
consider how to better integrate internal and external resources, accelerate
knowledge sharing and data
flow, and improve internal management capabilities and operational efficiency in
order to maintain stable
profitability growth and establish an agile organization.
CURRENT LANDSCAPE OF THE DISPLAY INDUSTRY

Do

The upstream of the display industry consisted of various component parts,

including process equipment,
core materials, and key accessories, such as glass substrates, liquid crystal
layers, and polarizers. The
midstream was involved in panel manufacturing and module assembly. The downstream
included various
end products, such as car displays, tablets, and smartphones, among others. 4 The
midstream, which
manufactured or assembled upstream raw materials and components into display
screens for downstream
terminal equipment, was the core of the entire industry.5 Therefore, the
development stages of the display
industry could be categorized based on the technological changes in the midstream.
After going through
two stages of cathode ray tube (CRT) 6 technology industrialization and liquid
crystal display (LCD)
technology becoming the market mainstream, the current display industry had begun
to enter the stage of
new display technologies, such as organic light-emitting diode (OLED), 7 active-
matrix organic lightemitting diode (AMOLED), mini light-emitting diode (LED),8 and
micro LED, among others, coexisting
with LCD. However, LCD had not been replaced and was still the mainstream
application. 9

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The prosperity of the display industry was usually influenced by demand changes of
downstream consumer
electronics products and technological innovations. Therefore, it exhibited strong
cyclical trends. 10 The
cyclical trend that had emerged in the display industry, based on the mainstream
LCD, was known as the
“crystal cycle” (see Exhibit 1).11 Due to the existence of the crystal cycle,
enterprises in the display industry,
especially midstream panel manufacturers, typically carried out counter-cyclical
investment, which entailed
increasing investment and expanding production capacity during the recession
period, which enabled such
enterprises to more occupy market advantages and elevate their status in the
industry more quickly.12

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China began exploring and developing the display industry at the end of the
twentieth century. China’s
industrial scale of LCD had ranked first in the world, and its capacity of OLED
display panel had ranked
second.13 After 30 years of development, BOE had become the world leader in display
industry, and its history
was inseparable from the development process of the Chinese display industry. The
growth history of this
world-class enterprise provided a condensed history of the development of China’s
electronics industry.13
BOE'S TRANSFORMATION AND ENTREPRENEURSHIP

The predecessor of BOE, Beijing Electron Tube Factory, was the leading electronic
component factory in
Asia, specializing in electronic tube technology.14 However, due to not keeping up
with the pace of the new
technological revolution, it was on the brink of bankruptcy.15 To save it, in April
1993, an entrepreneurial
team led by Dongsheng Wang (BOE’s former chair) underwent a share restructuring of
the Beijing Electron
Tube Factory and established BOE.15
Joint Venture Entrepreneurship

tC

At its establishment, BOE chose to develop the CRT display-related business, which
had a significant market
share in China at that time. CRT displays had certain technological continuity with
electron tubes; therefore,
some talents, process equipment, and skills could still play a certain role.16
However, due to BOE’s extreme lack
of accumulation in CRT core technology, experience, and knowledge, coupled with the
immaturity of related
industries in China, CRT technology was mainly introduced from Japan and South
Korea.17 As such, BOE
encountered great difficulty in acquiring knowledge, and its business development
was hindered.

No

BOE’s senior management made the decision to pursue a strategy of joint venture
learning and innovation,
believing that, in order “to achieve a certain level of the enterprise, it must be
internationalized” and that
“the best way . . . was to establish a joint venture with foreign companies and
learn from others’ skills.”18

Do

From 1993 to 1995, BOE jointly produced components for colour picture tubes with
the Japanese firms
Asahi Glass Co. Ltd., Nippon Tanshi Co. Ltd., and Nissin Kogyo Co. Ltd.19 To meet
the requirements of
the collaboration, BOE implemented strict on-site management and a responsibility
system in the factory,
aligning product quality, cost, and delivery time to approach those of advanced
international enterprises. 20
With the success of the joint venture, BOE’s original factory workers were able to
gain practical experience
and accumulate knowledge of Japanese production lines. Japanese companies also
provided training
opportunities for Chinese employees, which improved employees’ horizons and
enhanced their technical
capabilities.Error! Bookmark not defined. Some returning employees expressed that
they felt BOE’s technology and
management gaps compared to their own experiences in Japan. This not only sparked a
strong desire to
learn but also cultivated disciplined and efficient work habits. 21 Many employees
who continued with
further education and training eventually became middle- and high-level leaders or
senior technical experts
at BOE, contributing significantly to the company’s development.22

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Clear Development Direction

In 1997, BOE achieved a turnaround and recorded a group profit of ¥40 million, 23
becoming the world
leader in CRT displays.24
However, the experience of Beijing Electron Tube Factory having been on the brink
of bankruptcy made
BOE realize the importance of maintaining sensitivity to technological advancements
and development. It
understood that achieving profitability did not necessarily mean future success.
Therefore, it shifted its
focus to the next generation of CRT technology, including plasma display panel
(PDP), 25 thin-film
transistor (TFT),26 and field-emission display (FED).27

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To determine a specific direction, BOE began to study the industry’s history of

technology replacement. In
1994, the company established a display pre-research group composed of experts, to
track and investigate
next-generation technologies such as TFT, PDP, and FED, as successors to CRT. 28
After conducting preresearch and forecasting future trends in mobile display
applications, BOE made a strategic decision to
enter the field of TFT LCD.29
However, BOE once again faced the challenge of insufficient knowledge in technology
when entering into
the new field of LCDs. How should BOE approach the LCD market? Should it continue
their previous path
of joint venture?
ENTRY INTO THE LCD INDUSTRY

tC

BOE had been developing its picture tube business through joint ventures for over
20 years.30 However,
even as picture tubes became obsolete, BOE had still not truly grasped complete
design capabilities. 30 Both
BOE’s own experience and the practices of other enterprises have proved that it is
difficult to develop core
technologies merely by joint ventures, let alone support China’s industrialization.
31 How would BOE
compensate for its insufficient knowledge in LCDs and successfully enter the LCD
field?
Laying Out TFT LCD

No

BOE’s senior management believed that adopting a strategy of acquisition,

digestion, absorption, and
innovation would not only reduce risks but also enable the company to quickly grasp
core technology.32
“By acquiring overseas companies’ technology, markets, and talents, we can enter
such high-end fields
rapidly at a high starting point,” summarized Chen Yanshun, BOE chair.33
In 2000, as the crystal cycle entered a decline period, SK Hynix Inc. (Hynix), a
South Korean semiconductor
company, was eager to sell Hydis, its TFT-LCD business to compensate for financial
losses (see Exhibit
2). This presented BOE with a favourable acquisition opportunity.34

Do

In 2003, BOE acquired Hydis, a company focused on display technology, for US$380
million. 35 This
acquisition gave BOE ownership of Hydis’s three TFT-LCD production lines,
production equipment,
technology, patents, and global TFT-LCD marketing network, as well as over 1,700
Korean managers and
technical personnel. Additionally, Hydis’s customer base included well-known
companies such as
International Business Machines Corporation (or IBM) and Sharp Corporation. 36
Meanwhile, BOE
accelerated the layout of the TFT-LCD industry in China by manufacturing backlight
sources, cold cathode
lamps, colour filters, and other products to establish a presence in the upstream
segment of the TFT-LCD
industry.19 In 2003, BOE acquired a 26.38 per cent stake in Crown Display, gaining
assembly capabilities
and the sales market for display products, which expanded its influence in the
downstream industry. 37

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After completing the acquisition, the prices of LCDs began to soar, and BOE,
leveraging its acquired
production lines’ capacity, gained a net profit of $60 million within the short
span of one year.38
Knowledge Transfer

Cultural Integration

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In June 2004, the prices of LCD panels experienced a sudden decline, resulting in a
bust in BOE’s
performance. In the same year’s fourth quarter, BOE incurred a direct loss of
approximately ¥300 million
yuan.39 The dividends brought by the boom period of the crystal cycle proved to be
only temporary. Without
independent capabilities, BOE would not achieve sustained profitability by relying
on acquisitions.
Retaining talents as well as digesting, absorbing, and gradually completing the
domestic transfer of
knowledge in TFT-LCD production and technology to establish its core technology and
competitive
advantage became the initial challenge for BOE following completion of the
acquisition.40

Hydis, a subsidiary of Hynix, specialized in TFT LCD. Its core technical team
demonstrated great resilience,
even when facing the parent company’s plan to “abandon” them. They ensured the
normal operation of secondand third-generation TFT-LCD production lines and even
independently developed their 3.5-generation
production line.41 At the time of the acquisition, Hydis had more than 2,000
patents and was generating more
than 20 new patents every month.42 BOE’s senior management once said, “In essence,
what we acquired was a
team with strong research and development capabilities and high professional
qualities.”43

No

tC

To prevent talent loss after the acquisition, BOE made commitments from the
beginning to (a) not lay off any
employees, (b) keep positions unchanged for three years, (c) maintain existing
regulations and management
practices, and (d) preserve salaries and benefits. These commitments convinced many
South Korean employees
to continue working with the company.44 In September 2003, BOE officially commenced
the investment and
construction of their fifth-generation TFT-LCD production line in order to promote
localization of TFT-LCD
technology in China.45 BOE relocated over 100 South Korean engineers to Beijing,
with the hope that Chinese
employees would acquire relevant technical knowledge from South Korean counterparts
during the production
line construction process. However, South Korean technical personnel were reluctant
to share their knowledge
and collaborate with Chinese employees. 46 BOE realized that promoting technical
learning and knowledge
transfer required not only retaining talent but also the merging of ideas.47

Do

To bridge the cultural differences between the two parties, BOE implemented a
dedicated etiquette course to
introduce both Chinese and South Korean employees to each other’s cultures. It also
organized experiential
workshops, such as role-playing, and provided assistance to address the daily
living problems faced by the South
Korean employees. These activities accelerated the integration of the two cultures,
and enhanced communication
among Chinese and South Korean employees. 48 In October 2005, after several
brainstorming sessions and
workshops led by Dong and his team, the 2005 version of the corporate identity
system49 was released to unify
the thinking and action plan of employees from different nationalities and cultural
backgrounds.50
System Implementation

After the successful acquisition, BOE’s internationalization level continued to

deepen, with an increasing
number of R&D centres and manufacturing bases, as well as global coverage of
marketing and service systems.51
This inadvertently resulted in obstacles to the exchange of technical knowledge
among employees from different
nationalities, making co-operation between them became increasingly difficult and
cumbersome.52

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To support the production and operation of TFT-LCD production lines, as well as

facilitate the rapid
localization and mass production of TFT LCDs in China, BOE began systematic
construction and
implementation in 2003.53 It adopted a system work platform that supported real-
time communication,
knowledge sharing, and mining, replacing the administrative office automation (OA)
platform. 54 This new
platform allowed employees to stay updated with the latest information, engage in
question-and-answer
(Q&A) sessions, access online resources, and visualize work processes and schedules
arrangements
anytime, anywhere.55 Many leaders and employees praised the new platform, saying,
“If this platform had
been implemented earlier, it would have connected the communication channels
between BOE’s peopledepartment-enterprise,’ clarified work arrangements, and
improved work efficiency.” 56

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Later on, BOE established three major platforms that effectively supported the
implementation and rapid
development of its entire business, including an operations management platform
centred around enterprise
resource planning (ERP), a collaborative office platform centred around the OA
system and instant
messaging tools, and a computer-integrated manufacturing (CIM) platform centred
around manufacturing
execution systems. These three platforms were used to support decision-making,
collaboration, and process
control, and to enable large-scale customized production and automated production
across various aspects.57
In 2005, BOE successfully achieved mass production with its first fifth-generation
TFT-LCD production
line, relying on own its independent technology and marking the end of the “era of
China’s lack of selfowned LCDs.”58
BOE’S CAPABILITY UPGRADE

tC

To construct the fifth-generation TFT-LCD production line, BOE invested billions of

dollars, resulting in
a funding gap. It was crucial for the company to achieve mass production of the
fifth-generation TFT-LCD
panels in order to improve its performance.59 However, just as BOE’s fifth-
generation panels entered the
market, competitors, such as Samsung and LG, collectively reduced prices to
compete, causing the market
price of LCD panels to plummet. BOE suffered losses, and its capital chain was
almost broken. 60 From
2005 to 2006, BOE continuously encountered a bust cycle in the LCD industry, 61
making its situation
increasingly challenging.

No

Rapid Expansion of Production Lines

Do

In the face of the challenging circumstances during this phase, Dongsheng Wang
said, “We must rely on
economies of scale to achieve large-scale IT [information technology]
manufacturing.”62 BOE believed that
it could only establish a foothold in the global market by swiftly catching up with
the latest technology. For
the LCD industry, achieving economies of scale was the foundation for catching up
and becoming one of
the top global manufacturers in terms of production capacity.63 Otherwise, the
company would struggle to
generate profits. 64 Therefore, BOE commenced the implementation of its strategy as
an independent
innovation pursuer, and accelerated the construction of production lines.65
Since 2006, BOE had established subsidiaries in Singapore and South Korea, as well
as subsidiaries and
research and development centres in Japan and America.66 In order to better expand
its global business and
pursue technological catch-up, BOE utilized the architecture, technical knowledge,
and successful
experience accumulated from its fifth-generation production line as a template.
Supported by an operational
management platform, an efficient collaborative office platform, and a CIM system,
combined with the
customized requirements of each production line, BOE had enabled rapid replication
and expansion of its
production lines.67 In 2008, when the financial crisis broke out, BOE adopted the
strategy of counter-

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cyclical expansion practised by Samsung and LG to build the Chengdu 4.5-generation

TFT-LCD
production line.68 From 2009 to 2012, BOE constructed sixth-generation TFT-LCD
production lines in
Hefei and 8.5-generation TFT-LCD production lines in Hefei and Beijing. 69 In 2011,
BOE pursued
independent innovation in AMOLED technology to achieve subsequent technical
extension and
development, and invested in China’s first 5.5-generation AMOLED pilot line in
Ordos. 70
In 2010, BOE’s sixth-generation production line went into mass production, putting
an end to China’s
history of relying entirely on imports for LCD TV screens.29 In 2011, BOE’s 8.5-
generation production line
successfully entered mass production, marking the end of the era without large LCDs
in mainland China,
and truly achieving the domestic production of a full series of LCD screens in
China. 29

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Internal Reform

The increase in production lines not only failed to achieve the expected economies
of scale but also
exacerbated the impact of the crystal cycle on profitability.71 From 2008 to 2012,
TFT-LCD production lines
of BOE were running at full capacity, but its non-GAAP 72 net profit was negative
due to several bust cycles.73
The most prevalent public perception about BOE was that it was a money-burning
machine.74 BOE had to
consider how to achieve economies of scale and sustainable growth in its display
business. At this point, BOE
had to consider how to avoid the impact of the bust period within the crystal cycle
and achieve more stable
profitability and development while obtaining economies of scale in its display
business.75

tC

Since its early days of entrepreneurship, BOE had granted its subsidiaries
significant autonomy in decisionmaking, resulting in decentralized overall
management functions within the group.76 With the expansion of
production capacity, BOE often faced internal competition for resources among its
multiple production
lines, leading to information and resource exchange blockages, significant waste,
and low efficiency.76
Hong Wang, BOE’s vice-president, said, “The lack of efficiency in achieving
economies of scale was due
to the separation of our production base, procurement, and sales operations. Our
system platforms were
independent, and our data wasn’t integrated. . . . It’s like having five fingers
that can’t make a fist.” 77

No

In 2010, BOE officially initiated the implementation of strategic, organizational,

process, IT, and control
reforms.78 The focus of the first phase was functional management
professionalization and centralization, by
establishing “central organizations” at the group level for enterprise planning,
operations management,
product development, global marketing, and other functions.79 The second phase of
the reforms aimed to
enhance internal control, implement comprehensive budget management, and promote
process optimization
and IT security.80 By building a global data centre with a two-site, three-centre
architecture, unifying systems
(OA, ERP, supplier relationship management, and product life cycle management)
across all locations and
standardizing system architecture, business processes, and data (financial,
engineering, production and
operations, customers, suppliers, etc.), BOE achieved specialization,
standardization, and unification.57

Do

BOE’s internal problems had been addressed with the implementation of these
changes. Its display business
had gradually achieved economies of scale, resulting in reduced production costs
and unnecessary losses
for individual products.81 In 2013, BOE achieved the goal of highest gross profit
margin in the industry.82
In 2014, its smartphone and tablet computer display market share reached first in
the world.83
EXTENDING THE MAIN BUSINESS

As the display business entered a normal trajectory, BOE transitioned from being a
follower to becoming a
challenger. Chen, chair of BOE, stated that “the display (D) business has already
strong competitiveness. We

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Organizing Internal Knowledge

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should focus on the two core technologies of ‘display, sensing,’ as well as use the
accumulated knowledge and
technological advantages from years of experience to cultivate the next revenue and
profit growth pole, in order
to achieve long-term stable and sustainable revenue and profit growth.”84 In 2014,
BOE launched the DSH85
innovation development strategy, aiming to achieve cross-border innovation and
diversified development.86 The
smart IoT (S) business and smart medical and health care (H) business heavily
relied on knowledge accumulated
in the D business.87 How to efficiently utilize and share the knowledge accumulated
over the years through
knowledge management became a new issue that BOE needed to focus on. In 2015, BOE
officially listed
knowledge management as one of the important development strategies of the
enterprise, believing that
knowledge management was the soft power and foundation of enterprise development,
and requiring the
establishment of a knowledge-sharing system that allowed for convenient search for
all employees.88

tC

As knowledge management was recognized as an important aspect of the group’s

development, BOE
established a specialized knowledge management department to coordinate the group’s
knowledge
management efforts and provided theoretical training to the department’s employees
on knowledge
application, processes, and sharing,89 Specifically, BOE’s knowledge management
department regularly
organized internal sharing sessions to showcase learning content and address
inquiries, with resulting
content files and resources being uploaded to the knowledge management system.90
The department also
regularly organized events featuring external experts who shared their experiences
and exchanged training
sessions with knowledge management benchmarking enterprises such as Huawei
Technologies Co. Ltd.
and Siemens AG. 91 To accelerate knowledge identification, sorting, and storage,
the knowledge
management department formed a knowledge management team that conducted
retrospective analysis
combined with business processes. An employee who participated in the retrospective
analysis said that
“the experience and processes established in some factories can be applied to other
production lines, and
the relevant experience can be organized by the knowledge management department and
applied to other
production lines, facilitating faster production.”90

No

In 2016, the production lines that had been or were under construction throughout
the entire group, as well
as 15 central organizations within the group, implemented document archiving
knowledge management,
completing the construction of the knowledge management capital database.91 The
database system could
automatically create, review, archive, and upload files, apply version updates, and
record information,
facilitating efficient management and sharing applications.91
Launching the Social Collaboration Platform

Do

At the end of 2016, BOE launched a social collaboration platform, called BOE 3KS.
90 To attract more
platform users, BOE first launched an open community and forum modules that allowed
free expression.
These modules were promoted together with the community and forum templates
prepared in advance by
the knowledge management department and the largest business group within the
company—the R&D
team.90 Some technical solutions were recorded within the community and could be
opened for sharing
after the secrecy period ended. After the platform reached a certain scale, BOE
added modules such as
encyclopedias, journals, expert yellow pages, new employee communities, badges, and
Q&A sections to
the social platform. The encyclopedia module mainly listed the industry’s
proprietary abbreviations online,
replacing the previous method of manually jotting notes or verbal instructions from
the masters to simplify
and remember the process. The new employee community could help new employees with
basic knowledge
and work processes, office software operations, email writing skills, and other
such operations. The Q&A
and expert yellow pages modules helped users ask questions anytime, anywhere, and
easily seek solutions

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from business experts throughout the company.88 Moreover, BOE also created a public
account called
Knowledge Cool Pro to share relevant knowledge about the display industry with the
outside world. 92

By 2018, 62 practical communities had been established on the social collaboration

platform. The Q&A
platform successfully addressed over 800 difficult technical questions for BOE
users, and the knowledge
encyclopedia section had compiled over 6,000 exclusive terms for BOE.90 All of this
information had been
accumulated as organizational knowledge.90
Designing Incentive Systems

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The establishment of the knowledge base and social collaboration platform had
contributed to the
continuous improvement of BOE’s knowledge management system. However, the mere
establishment of
these systems did not guarantee the success of knowledge sharing. To encourage
knowledge output and
sharing, BOE evaluated the value of core knowledge in procedural documents for
individual employee
output, which served as a reference and supplement for individual performance,
incentives, and career
advancement. Departmental knowledge managers regularly uploaded non-process
standard documents
based on shared needs, and established a performance evaluation system for the
department’s knowledge
management system. System administrators conducted horizontal comparisons between
departments every
month and rewarded departmental managers who uploaded more documents per person.93

tC

The social collaboration platform employed diverse methods of recognition. BOE

ensured that knowledge
demanders received more satisfactory expert Q&A services by providing expert wealth
values and badge
points as honorary symbols. BOE also selected annual winners for the encyclopedia
item with the most
contributors, the Q&A platform, the most active community, the best journal, and
most active theme.
Individual or team winners would receive material rewards, and these award-winning
individuals would
also be invited to share their experiences or receive praise at platform summary
meetings or conferences.
The platform would help them establish a certain status and promote their
contributions to the platform.90

No

The increase in horizontal communication enabled knowledge to transcend management

hierarchy and
departmental restrictions, promoting the circulation and visualization of internal
organizational knowledge,
significantly uplifting the organization’s knowledge-sharing efficiency, as
evidenced by research on BOE’s
innovation ecosystem.94 This enhancement in efficiency further strengthened BOE’s
core competitiveness in its
new display and sensor businesses such as TFT LCD and AMOLED.95 Going forward, BOE
needed to consider
how to leverage its existing knowledge to combine core technologies with other
fields to achieve in-depth crossborder innovation and value extension.95 This
reflected the need for BOE to think further and explore ways to
build a multi-level strategic layout based on core capabilities and the expansion
of the industry value chain.95
TRANSFORMING INTO AN INNOVATIVE IoT ENTERPRISE

Do

As BOE emerged as a leader in the industry, it aimed to further enhance the value
proposition of its core
display business. In 2016, BOE creatively proposed the IoT innovation strategy of
“opening up the two
ends, core screen gas/device.”96 BOE’s main display business featured high product
standardization, a
single customer base, and a large transaction volume, which ensured accurate
process control. 97 However,
regarding the more segmented IoT market, BOE needed to respond not only to large
enterprise customers
but also to customers of different scales and sizes, with highly uncertain order
amounts. As business became
more customized, scenario based, fragmented, and dynamic, the IoT sector was giving
rise to new
commercial forms.98 How should BOE respond to this?

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Comprehensive Transformation

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To match the transformation of the IoT, BOE began comprehensive system optimization
in 2017, using
digital technology for digital transformation, deploying an information system
cloud platform and building
the group’s data centre and business centre.67 In 2018, the original DSH’s three
major business sectors were
subdivided into seven business groups.99 In 2020, BOE established a “1+4” aircraft
carrier business group100
and a “three-horizontal and three-vertical” organizational operation management
system for the IoT
transformation business.101 The driving force of this system was the “three hearts
and five spirits,”102 and
the entire system was revitalized through digital transformation, laterally
connecting the front, middle, and
back business platforms, and vertically integrating the vertical management system
related to strategy,
process, and performance. The ultimate goal was to gradually achieve integration
across business, product
lines, product life cycle, platforms, and mechanisms.103
Digital Knowledge Management

BOE’s information and resource exchange became more frequent with the subdivision
of business units,
the deepening of the five cross-functional initiatives, and the increased
interaction between employees,
partners, and customers. This brought about a significant emergence of knowledge,
presenting higher
requirements for the enterprise knowledge management department.104 Employees of
the department said
that “there was already a lot of content on the platform. We hoped to use the
knowledge base as a launching
point to construct more knowledge scenarios, so that more knowledge could be
generated and added to the
knowledge base. This will facilitate a process of virtuous cycle.”90

No

tC

In 2019, BOE initiated the establishment of a unified search knowledge management

platform that
integrated multiple knowledge systems and databases. Leveraging digital
technologies such as cloud
computing and big data, the platform collected the latest external information in
the industry and internal
knowledge deposits in real time, accurately targeted user needs, achieved
intelligent knowledge push, and
improved user satisfaction and content access efficiency.91 In 2021, BOE
established a chief transformation
and information officer organization105—a strategic support organization—to promote
the full process of
digital transformation management. By developing processes and information plans,
the organization aimed
to drive the implementation of landing solutions and create an innovative platform
through new thinking
and technologies such as interactive experience, knowledge sharing, and data flow.
106 With the deepening
of digital transformation, full-chain application, and intelligent and scenario-
based knowledge
management, BOE’s infrastructure became more elastic and scalable, realizing
unified resource
management across systems, platforms, and regions, and delivering different system
support and technical
knowledge resources according to the needs of different user types, categories, and
scenarios. This, in turn,
allowed internal employees, partners, and customers to obtain resources based on
their own needs. 67

Do

This series of actions greatly improved BOE’s operational management quality,

efficiency, and
organizational agility, and the transformation toward the IoT gradually moved onto
the right track.107 Even
in 2021, when the display industry entered a bust cycle, BOE’s mainstream
application market share in the
display business continued to rank first, and its annual revenue increased by about
61.79 per year on year.
The revenue of its innovative IoT, sensors and solutions, and smart medical
equipment businesses also
increased by 47.98 per cent, 80.43 per cent, and 21.29 per cent, respectively, year
on year.108

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Page 10

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os

FUTURE CHALLENGES

op
yo

BOE’s industry resilience, lean management capabilities, and sustainable

development capabilities had
overall performed significantly better than the industry average and had been less
affected by the industry’s
bust cycles.109 While developing semiconductor display technologies such as LCD,
OLED, and mini LED,
BOE also promoted the transformation toward the IoT. 110 Since 2021, BOE had
embarked on a
transformative journey to become a global IoT innovation enterprise, with the
“Screen for IoT” strategy as
its core.111 Chen pointed out that BOE’s current development should comply with the
trend of the digital
age, focusing on customer orientation, integrating resource advantages, and
stimulating capabilities to
empower millions of segmented markets and application scenarios by integrating more
functions, deriving
more forms, and implanting more scenarios in the screen to achieve value co-
creation with partners. At this
stage, effectively integrating and managing its own, customers’, and ecosystem
partners’ knowledge
resources had become crucial for BOE’s future development.112

Do

No

tC

The close collaboration between BOE and its external customers and partners, along
with the expanding
number of market segments and application scenarios for screens, had led to
increased opportunities for
acquiring, transferring, applying, and innovating core resources such as knowledge.
However, these core
resources had become more dispersed, hidden and redundant, which hindered the
integration of core resource
advantages such as knowledge.113 Therefore, BOE would have to carefully consider
(a) how to efficiently
integrate and manage its own customers’ and ecosystem partners’ knowledge, (b) how
to promote knowledge
fusion and innovation to accelerate the deep integration of “display technology +
IoT applications,”91 and (c)
how to sustainably empower customers, partners, new scenarios, new forms, and new
functions.
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os

EXHIBIT 1: THE CRYSTAL CYCLE

Page 11

The cyclical characteristic of the LCD industry was also called the crystal cycle,
which referred to the cycle
of the rise and fall of the panel price caused by the changing supply and demand of
the TFT-LCD market.
Specifically, a number of industrialization pioneers had opened up the application
of LCD products, creating
a market demand for LCD. As the product gained acceptance in the market, a brief
period of supply
shortage prompted new investments from companies and the entry of new players into
the market. The
rapid capacity expansion brought about by new investments led to overproduction and
a decline in prices,
causing an industry bust. However, the resulting decline in prices increased
demand, and the lower cost of
LCD products allowed for the continuous expansion of their application scope,
leading to a shortage of
production capacity and triggering a new round of investment and the entry of new
enterprises. This cycle
repeated itself over and over again. Since 2006, the LCD industry had experienced
four crystal cycles, as
shown in Exhibit 2.

Do

No

tC

op
yo

Note: TFT = thin-film transistor; LCD = liquid crystal display.

Source: Jihong Liu, “The Last Crystal Cycle” [in Chinese], Stock Market Trend
Analysis Weekly, no. 47 (2019): 40–41,
https://kns.cnki.net/kcms2/article/abstract?v=lfoZxnPhf0VjgfinkEYZ667TMMDTiH-
PPhprgqVcsa_-3K1SFjPMdU dYMJexlyJL
Nw_751qEeuJxZ80hxI-2DWAAYpvEhNuii3JOndZwXuYWqNsLojPOq2o-vyp4-
_hUuzbUbcozWvI=&uniplatform=
NZKPT&
language=CHS; “The Crystal Cycle” [in Chinese], Xueqiu, January 20, 2021,
https://xueqiu.com/8643527413/169261680.

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University until Jun 2023. Copying or posting is an infringement of copyright.
[email protected] or
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os

EXHIBIT 2: FOUR LCD CYCLES, 2006–2023

Page 12

Cycle

Analysis of historical panel cycles

2007–2008

Boom cycle

2008–2009

Bust cycle

2009–2010

Boom cycle

2010–2011

Bust cycle

2011–2015

Boom cycle

2015–2016

Bust cycle

2016–2017

Boom cycle

In 2006, cathode ray tube monitors entered the end of their technological
lifespan. Products based on LCD technology emerged victorious in the
competition with products based on plasma display panel technology,
leading to the accelerated popularity of LCD televisions. The industry
maintained its boom.
The successive outbreaks of the global financial crisis and the European
debt crisis led to a worldwide economic recession. The economy declined,
resulting in an imbalance between panel supply and demand in the
industry.
The rise of the mobile internet industry caused by 3G networks and the
advent of new intelligent terminals such as smartphones and tablet
computers generated huge demand for mobile devices, which promoted
the recovery of global LCD panel demand.
In 2010, the eurozone crisis broke out again, causing another shock to the
global economy, with reduced consumer electronics demand leading to a
sharp decline in panel demand.
In 2011, the trend of larger mobile screens was established. Furthermore,
the commercialization of 4G mobile communication networks led to
explosive development of the mobile internet industry, and the rise of small
and medium-sized information technology panels contributed to another
prosperous cycle in this industry.
In 2015, the significant increase in LCD panel supply from multiple
production lines, and the sluggish demand caused by the A-share market
crash, led to significant profit declines in the panel industry due to supply–
demand imbalances.
In 2016, domestic high-generation LCD production capacity expanded
rapidly, while Samsung and LG shifted their focus from LCD to OLED, and
reduced LCD production capacity. The supply and demand imbalance in
LCD was eased, leading to price increases and industry profits being
repaired. The global shipment of smartphones hit a historic high, driving a
significant increase in panel industry orders.
In 2017, global smartphone shipments declined for the first time, and the
smartphone entered the stock era. From 2018 to 2019, the explosion of
domestic LCD production capacity led to a significant drop in panel prices,
and the panel industry fell into another bust cycle.
LG and Samsung further withdrew from LCD production capacity, and the
outbreak of COVID-19 led to the suspension of domestic factories,
significantly reducing LCD production capacity. In 2019, the wave of
upgrading to 5G mobile devices and the rise of the “home economy” led to
continuous growth in terminal equipment demand. The supply and demand
imbalance caused panel prices to rise continuously.
In the second half of 2021, LCD production capacity was concentrated on
releasing. Still, due to the “home economy” overdrawing demand ahead of
time and macro factors such as high inflation in Europe and America and
the Russia–Ukraine conflict, downstream terminal demand sharply
decreased, and the LCD panel industry once again entered a recession
cycle that continued to this day. However, in the second half of 2022,
industry manufacturers took measures to stabilize panel prices, and the
industry as a whole showed signs of recovery.

Bust cycle

Boom cycle

No

2019–2021

tC

2017–2019

2021–present

Do

op
yo

Date

Bust cycle

Note: LCD = liquid crystal display; OLED = organic light-emitting diode.

Source: “The Crystal Cycle” [in Chinese], Xueqiu, January 20, 2021,
https://xueqiu.com/8643527413/169261680; “LCD Panel
Special Report – Exploring a New Stage of Stable Profit in Mild Upswing” [in
Chinese], Guosen Securities Research Institute,
February 2, 2023, https://mp.weixin.qq.com/s/fUz3Nk_bNRCjl9zPDFBbSA.

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[email protected] or
617.783.7860
W37354

Page 13

rP
os

ENDNOTES

Do

No

tC

op
yo

1
This case has been written on the basis of published sources only. Consequently,
the interpretation and perspectives
presented in this case are not necessarily those of BOE Technology Group Ltd or any
of its employees.
2
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3
BOE
Technology Group Co. Ltd.,
Annual
Report 2022
[in
Chinese], April 4,
2023, 15,
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2022%E5%B9%B4%E5%B9%B4%E5%B
A%A6%E6%8A%A5%E5%91%8A.pdf.
4
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Downstream Markets of China’s New
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5
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and
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[in
Chinese],
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22,
2022,
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6
The CRT was the earliest widely used technology in displays, generating a high-
voltage electron beam to produce images
on the screen.
7
OLED was a current type of organic light-emitting device that better met the needs
of new technologies than LCD.
8
A mini LED was a device with a chip size between 50 and 200 microns.
9
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China’s OLED Will Catch Up Later”
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id=1685075943576531626&wfr=spider&for=pc.
10
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23
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24
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25
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26
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high-brightness, and high-contrast displayscreen information.
27
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30
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This document is authorized for educator review use only by Bilawal Ali, Bahria
University until Jun 2023. Copying or posting is an infringement of copyright.
[email protected] or
617.783.7860
W37354

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os

Page 14

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No

tC

op
yo

31
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32
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33
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35
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39
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50
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53
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56
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“BOE
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GAAP = generally accepted accounting principles. Non-GAAP reporting adjusted
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DSH was a strategy BOE launched to transform from a single display device business
to three major sectors: D, S, and H.
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growth business, emphasized smart IoT
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The business group focused on semiconductor display business, which encompassed
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This was the corporate spirit that BOE had developed during its development
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A chief transformation and information officer organization was a strategic support
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This document is authorized for educator review use only by Bilawal Ali, Bahria
University until Jun 2023. Copying or posting is an infringement of copyright.
[email protected] or
617.783.7860