Xiaomi's Methodology Building Internet Products
How Four Principles—Focus, Extreme, Word-of-Mouth, and Speed—Shaped Xiaomi’s Product Thinking and Operations
This methodology is explained in detail in the book by Xiaomi’s founder, Lei Jun.
At the heart of Xiaomi’s rapid growth lies a simple but powerful framework—four words that define how the company builds products, makes decisions, and grows: Focus, Excellence, Word-of-Mouth, and Speed. Known as the Xiaomi Methodology, this set of principles is more than a slogan—it is a universal strategy playbook that Lei Jun believes applies not only to tech companies, but to any innovation-driven organization. These four pillars guide how Xiaomi approaches technology development, user experience, product design, and operational efficiency. Together, they form the foundation of what Lei Jun calls the root of all Xiaomi’s past, present, and future success.
Focus
Focus is presented not just as a business strategy but as a deep understanding of purpose and a restraint of ambition to achieve concentrated effort.
Core Meaning: True focus involves understanding what should be done and, crucially, what should not be done. This is guided by a company's clear mission and vision, which serve as the ultimate decision-making basis. It requires restraining greed and adhering to the principle that less is more.
Application in Product & Business: For any specific business objective, based on insight and capabilities, the task is to continuously narrow down and concentrate on the necessary "smallest cut".
In product definition, particularly for creating a hit product, the primary rule is doing subtraction. This emphasizes "less is more," focusing solely on solving the user's most urgent needs and doing that one need thoroughly. The initial design of the Xiaomi Handband, which omitted a screen to prioritize battery life and focused only on core functions like step counting, call reminders, and sleep monitoring, is a concrete example of this subtractive approach, despite internal debate.
Organizational Focus vs. Expansion: While Xiaomi has expanded its product categories, Lei Jun argues it maintains focus by consistently adhering to its mission, pursuing efficiency, building a smart ecosystem around user needs, and supporting ecosystem partners. Xiaomi's main business (phones) has remained sufficiently focused. Business expansion is seen as synergistic, building upon the success and flywheel effect of previous focused efforts.
Maintaining Focus in a Large Organization: In larger companies, maintaining focus requires goal decomposition and continuous verification to ensure alignment with the core strategy. Management tools like OKR (Objectives and Key Results) are used to help large teams stay aligned and focused on shared goals.
Balance in Focus: Lei Jun cautions against dogmatic adherence to focus. There should be "grey areas" on the edges of the defined focus to allow for innovation and vitality. This requires a strong organizational culture and values, like the engineer culture mentioned later in the book.
Extreme
Extreme is portrayed as a relentless pursuit of the best possible outcome, going beyond merely being "good" or "sufficient." It's about challenging limits in both effort and understanding.
Core Meaning: Extreme means striving to reach the limits of one's ability and achieving a height that others cannot. It involves unlimited mental investment, sparing no effort to get the best result. It also means relentlessly pursuing the optimal solution, deeply understanding the essence of the industry and user needs.
Spirit and Practice: Achieving "extreme" requires an uncompromising attitude, noticing and refusing to tolerate imperfections that others might ignore. The long, iterative process of refining designs is essential. This involves patience and persistence through difficult, repetitive tasks, always striving for perfection. This is seen as a skill that can be honed, not just a talent for geniuses.
Creating Superior Products: Achieving the "extreme" quality or design that exceeds user expectations requires significant unique innovation and pushing boundaries in technology and supply chain integration. Examples include using new materials like GaN for smaller, more efficient chargers or developing complex ceramic manufacturing processes for phone bodies, which initially had extremely low yields but were pursued for their unique feel and appearance, despite the high cost and difficulty.
Optimal Solution: The pursuit of "extreme" often leads to finding the optimal solution. This optimal solution isn't necessarily about the highest performance numbers (which increase with Moore's Law) but often comes from a more simplified or integrated approach based on user needs. Reducing the steps for a common task in MIUI is an example of finding a "minimal unit" optimal solution. Such optimal solutions can create a significant, almost "despairing," advantage over competitors.
Avoiding "Self-Indulgence": Not all efforts towards "extreme" are valuable. Lei Jun criticizes putting extreme effort into details that don't benefit the user, calling it "self-indulgence" or "showboating". Examples include expensive custom engravings on internal screws or elaborate SIM card ejector tools when simpler, cheaper alternatives suffice and the core product quality is paramount. Extreme effort must be directed towards user-centric value and align with the company's core focus. Using "extreme" merely as a gimmick for high pricing is also seen as lacking sincerity and ultimately failing.
Word-of-mouth
Word-of-mouth is presented as a crucial outcome and driver, stemming from exceeding expectations and encompassing the entire user experience.
Importance: Word-of-mouth is a powerful brand strategy and growth strategy. Products or services with good word-of-mouth can self-propagate and self-convert. It is considered the ultimate standard for measuring products and services, even more so than sales or profit, as it leads sales and profit. It's essential for creating a positive feedback loop between user feedback, product improvement, and business growth.
Source of Word-of-mouth: It's not simply about having a "good," "cheap," or even "good and cheap" product. The key is delivering a product or service that significantly exceeds user expectations. User expectation is a relative measure compared to industry standards or public perception. Maintaining a significant comparative advantage over peers is the fundamental source of strong word-of-mouth. The Haidilao example illustrates how exceeding expectations in unexpected ways (like giving a whole watermelon) can create a strong positive impression, relative to the typical restaurant experience, unlike a luxury hotel where high expectations are already set.
"Full-stack" Word-of-mouth: Drawing on the engineering concept, building word-of-mouth requires a comprehensive, "full-stack" approach. It encompasses the sum of all user interactions: product (performance, design, craft, pricing), service, and communication. Every detail matters in building and maintaining this reputation.
Building and Maintaining Word-of-mouth: This involves proactive engagement with users. Early Xiaomi required all team members, from partners to engineers, to directly interact with users on forums and Weibo, listen to feedback, and even invite users to development meetings. This enabled 7x24 product revision and helped avoid major directional errors from "closed-door development". Acting on feedback is as crucial as listening. Rapid communication, feedback, and correction with users are critical, especially in the mobile internet era where users prioritize quick improvement over initial perfection. Facing genuine (including negative) word-of-mouth directly and making rapid improvements builds user trust and can generate positive word-of-mouth itself.
Monitoring Word-of-mouth: It's important to avoid "information cocoons" and use multi-channel cross-verification to capture genuine feedback. Distinguishing feedback from core users (opinion points) vs. mass users (overall impression) is also necessary. Relying solely on manipulated or filtered positive feedback (like the failed flagship launch example) can be disastrous.
Word-of-mouth and Brand: Word-of-mouth is the foundation upon which a strong brand is built. Brand is defined as the comprehensive user perception from all interaction points. Building brand is a "full-hands" and "CEO project", requiring unified strategy across brand, tech/product, and user operations. Quantifiable metrics like NPS (Net Promoter Score) and BHT (Brand Health Tracker) are used to measure brand health and user satisfaction.
Fast
Speed is presented as a fundamental capability leading to efficiency and competitive advantage, requiring quick action and iteration in multiple aspects of the business.
Core Meaning: Being a faster company is correlated with higher efficiency and enables stronger insight, better adaptability, greater resilience, and more sustained innovation.
Four Capabilities: Speed is broken down into four core abilities: fast insight, fast response, fast decision-making, and fast improvement.
Fast Insight: Quickly understanding user needs or market opportunities. Example: Observing customer inquiries in a store led to the rapid development of the "Computer Entry" software.
Fast Response & Improvement: Using an internet development model allows for rapid iteration, characterized by fast communication, feedback, and correction with users. This means quickly fixing product issues based on user input. Users trust companies that are faster and improve quickly.
Fast Decision-making: Making quick, sometimes difficult, decisions based on insights. Example: Rapidly deciding to pivot Joyo.com from software downloads to e-commerce after realizing the former had no future. Also, the quick decision to abandon the initial Redmi H1 project and restart to create the successful H2.
Efficiency in Operations: Speed in the production and circulation processes, enabled by models like Xiaomi's, leads to faster delivery, faster feedback and improvement speeds, and shorter inventory cycles. Examples include quickly setting up systems for retail pilots and adapting manufacturing processes for flexibility and quicker validation.
Strategic vs. Tactical Speed: While tactical evolution must be fast, strategic accumulation cannot be rushed. Sometimes, localized or phased slowness is necessary to achieve overall long-term speed. Making hasty strategic decisions without deep thinking can be detrimental. Adjusting the target response time for Weibo customer service from minutes to 100 minutes to improve overall service quality across channels is cited as an example of choosing phased slowness for strategic gain. Abandoning the initial Redmi project to rebuild a better one is another instance of tactical delay for a superior strategic outcome.
Xiaomi’s playbook
The structural pieces that make the principles stick
Iron Triangle business model
Hardware: margin ≤ 5 %, outrageous cost‑performance.
New Retail: flat, data‑driven network (10 k + Xiaomi Home stores) with inventory owned by Xiaomi → ROI ≈ 30 %.
Internet Services: the real profit pool (ads, cloud, content).
Explosive‑product engine
One SKU, long life‑cycle, massive scale—e.g. 69 ¥ power‑bank, 79 ¥ Mi Band, 899 ¥ air‑purifier—all built by tiny, laser‑focused spin‑outs that share Xiaomi’s supply‑chain firepower.Ecological‑chain playbook
Minority‑invest in founders, give them industrial design, supply contracts and Mi.com traffic, but no operational choke‑hold. Result: 100 + companies, hundreds of category‑defining gadgets, and a constant stream of “free” user touch‑points.Smart‑manufacturing wedge
When contract factories became the bottleneck, Xiaomi built its own modular, miniaturised lines and started selling the tooling to its suppliers. Manufacturing the manufacturing is their next moat.
Five take‑aways you can apply Monday morning
Ship community first, product second.
Release the “ROM” version of your idea (an API, a Notion doc, a prototype) and let power‑users co‑design the roadmap.Price for delight, not just margin.
A “that can’t be right” price earns more impressions than any ad campaign—and forces you to build an efficiency culture.Measure loops, not funnels.
Xiaomi stopped chasing GMV when it saw that third‑party traffic wasn’t sticking. Track retention inside assets you control (app, store, Discord), or you’re renting, not owning.Own at least one upstream constraint.
Whether that’s a custom compiler, logistics software, or a ceramic supply‑chain, controlling a chokepoint buys you iteration speed.Write your three non‑negotiables now.
Xiaomi’s “Technology first / Cost‑performance backbone / Build the coolest products” became its litmus test for every new venture (including its EV bet). Define yours before scale muddies priorities.