In the new era of growth in the post-financial meltdown world, Taiwan's Top 1000 manufacturers, top 500 service industries and top 100 financial institutions are facing a major break with the past, in which the rules of the game have changed.

An earth-shaping reshuffle is taking place, redefining the most profitable businesses, the highest growth-potential industries, and the heroes who will win the greatest respect of the next generation.

Who will be the new standard bearers of the era of seismic shift? What companies are the new hot targets for investment this year? In this special "Top 1000" issue of CommonWealth Magazine, we will attempt to provide a few answers.

In late April, when Top 500 Service Industries leader Acer Inc. held its first-quarter investors' conference, not a seat was left empty. The cause of all the commotion: a new low-priced, thin, lightweight netbook with an eight-hour capacity battery.

"This is the very first time we are delivering less configuration, not more," said Acer CEO Gianfranco Lanci, choosing his words delicately.

It's not only Acer that's thinking that way.

According to recent reports, Sony is coming out with a US$199 digital camcorder.

"Sony Corp.'s new digital camcorder... symbolizes an important shift in Sony's culture, which has been focused on making expensive technological marvels rather than affordable, easy-to-use products," The Wall Street Journal opined.

Sony's shift to the lower price bracket has largely been driven by the stellar success of Flip Video in the United States. Flip Video brought its easy-to-use, no-frills camcorders to market in 2007, offering no zoom capability and just a 1.5-inch screen but equipped with a USB port for directly connecting to a computer and uploading videos to YouTube. They have since taken the market completely by storm, supplanting competitors offering higher definition, bigger screens and other complex features, and selling more than two million units in less than two years.

Truly Pleasing the End Consumer

With economic growth declining, the pursuit of ever more spectacular functional innovations can no longer be counted on to please end-market consumers. Even OEM manufacturers must seek out in-depth intelligence on what consumers want and how they actually live, if they are to make products that resonate in the end market.

With the world economy forecast to show a contraction this year, the direction of corporate innovation has taken a radical turn. Disruptive innovation and design thinking are now the hottest ideas to captivate the business world.

The business performance last year of Taiwan's five electronics titans, all leaders on CommonWealth Magazine's Top 1000 Enterprises list, should be a stark reminder: blind pursuit of operating revenue growth has bled them seriously, and bombarding consumers with new product features is no longer a sure-fire formula. Only those that can embrace disruptive innovation and design thinking to actually create value for the end-market consumer will see sustainable growth.

'Good Enough' is Best

As Clayton Christensen – the Harvard Business School professor who coined the term "disruptive innovation" – contended in his 1997 book The Innovator's Dilemma, today's corporations are producing innovations faster than the pace at which people are changing their lifestyles, but "disruptors" recognize that "good enough" may offer the optimum business opportunity.

One thing that can be gleaned from the performance of Taiwan's top 1,000 enterprises last year: Of those companies that assumed industry-leading market positions as a result of phenomenal growth, many are disruptors in their respective industries.

One of those disruptors is Taiwan's MediaTek, Inc., which sparked the low-end handset craze in China.

With little fanfare, MediaTek has become the world's fifth-largest IC design firm. MediaTek's operating revenue last year broke NT$90 billion, bucking the trends with growth of 12.1 percent.

"There's one special feature about China – it's a 'good enough' market," says MediaTek chairman Tsai Ming-kai. "But low price does not mean low-end technology. It can require even higher levels of expertise."

With a wave of MediaTek's magic wand, high technology became "good enough to use" technology. A provider of low-cost complete digital solutions, MediaTek engineered a dozen or more high-tech functions such as digital and video imaging, MP3 play/record, radio, PDA and electronic books into a single chipset, which is also modular, allowing handset makers to select options as if ordering from a menu, cutting development time for new handset models to three months, half that of the major international players.

ASUSTeK Computer, Inc.'s Eee PC is a prime example of the disruptive innovation phenomenon, and Christensen, the father of the term, specially invited ASUSTeK chairman Jonney Shih to deliver three lectures to his Harvard students.

Out of more than 100 companies in more than 60 industries that Christensen and his students researched, Taiwan's ASUSTeK was the only one invited to share its experiences. What attracted their attention was the Eee PC, and the  low-cost craze it set off last year, into which all the major international computer brands are plunging.

"They thought the most interesting thing was the relationship between low-cost disruptive technology and new markets," Shih explains. "Our 'E' stands for 'enough' and 'economical.'"

This is innovation, and it comes from having a solid understanding of the demands of the end consumer's lifestyle.

Consumer Anthropology

Initially, development on the Eee PC began after market research showed consumers wanted an easy-to-use computer with outstanding interaction like Nintendo's Wii.

The Eee PC's wild popularity, which continues unabated, redrew the playing field, blurring the line between computer and handset makers, and sparking a turf war that pits telecom providers against retail channels for computers, communications devices and electronic goods. The "digital convergence" that in the past was the subject of great discussion has finally found a platform on which to be realized.

Acer has also begun to exert more effort on end consumer research. This year's introduction of their netbook with an eight-hour battery life was preceded by meticulous research on more than 20,000 consumers before the direction of product development was determined.

Getting a handle on the pulse of consumers' lives allowed Acer to mount a sneak attack, launching its product six to nine months ahead of competitors.

Simply performing traditional consumer research, however, is not enough. It must be approached from an anthropological angle, with field investigations to closely observe the end user's environment and lifestyle, if one is to precisely weed out what consumers truly crave in products and services, and thereby seize a tiny growth niche.

In this regard, the service industry works much harder and is much more thorough.

Following long-term observation of its guests' habits, Formosa International Hotels Corp. will launch an entirely new brand, "Just Sleep," in June. These three-star hotels will offer no gym, pool or business center; rooms will be only about five square meters but emphasize comfort, cleanliness and style, all for NT$2,000 to NT$3,000 a night. The hotels have been designed around the "Three Bs" customers care about the most: Bed, Breakfast and Bathroom.

Getting the Native Point of View

So if your business is unsure how to conduct such observations, there's no harm in paying for the assistance of an anthropologist.

Pioneering anthropologist Bronislaw Malinowski argued that anthropologists needed "to grasp the native's point of view, his relation to life, to realize his vision of his world," explains C. Julia Huang, an associate professor at National Tsing Hua University's Institute of Anthropology.

Beginning in the late 1990s, companies began large-scale use of anthropologists to observe trends in consumer behavior. The idea behind the Centrino chip, the most successful innovation in the history of the Intel Corp., was developed from the ideas of two anthropologists who had studied the inter-ship communication behaviors among fishing boats off Bristol Bay, Alaska.

In Taiwan, applying anthropology to business has yet to become a prominent trend, but businesses are gradually catching on to its concepts.

In mid-April, MediaTek invited Tsing Hua University Institute of Anthropology's Huang to deliver a lecture to top executives at the company's offices. In addition to insights on cultural differences as they may pertain to the acquisition of foreign companies, Huang also discussed application of anthropology in observing the consumer's everyday milieu to gain a deeper understanding of the consumer.

New Titans Will Emerge from the Seismic Shift

Knowledge has now become a mass commodity. Merely knowing how to design products is no longer an impressive feat. Knowing what the consumer wants is the genuine way to create wealth.

As it approaches the key threshold of US$1 billion in operating revenue, global anti-virus software maker Trend Micro, Inc. is easing off a bit on growth.

"You have to understand the workplace milieu, the business milieu of the client to be able to innovate," observes Hsiao Reuylin, who has compiled 22 case studies from field investigations for Trend Micro.

He uses the material from the case studies to tell stories aimed at inciting innovation.

At noon one April day, more than 30 people gathered in Trend Micro's Dunhua South Road offices to hear six of the stories told at one go. The infectiousness of the tales also gave the ordinarily nerdy, technology-obsessed research staff a chance to conduct in-depth observations like anthropologists and draw cause-and-effect relationships like historians to come up with a number of innovative service ideas.

Taiwan's new business titans and new business paradigms will emerge from this great seismic shift. What's more, it will point the way toward the new wave in competitiveness: if you want to please the end market, you must deeply understand consumer's lives.

Faced with China's manufacturing might, the soft power that must be Taiwan's new wave of competitiveness will depend entirely on how much its businesses understand life.

Translated from the Chinese by Brian Kennedy