SUCCESS BASED ON

The world’s biggest white goods manufacturer, Haier, has become a benchmark of innovative management. Its success is based on five foundations.

FIVE FOUNDATIONS

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Case study

The challenge of change is to instigate it from a position of strength. Repeatedly companies attempt to change things as their performance deteriorates. Not Haier. Indeed, the more successful it has become, the greater its apparent appetite for change.

CHANGE THEN CHANGE AGAIN1

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Case study

During the ‘80s, Haier built its brand. In the ‘90s, it diversified and thereafter localised R&D, manufacturing and marketing. Using technology, today it aims to build a collaborative win-win networked ecosystem.

CHANGE THEN CHANGE AGAIN – THE HAIER HOW

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Case study

Self-managed teams are the dynamos of constant change at Haier. It’s thought that they create organisational mess, a chaotic free-for-all of talent and ideas. But this is the point at Haier: innovation and leading-edge thinking is not a tidy business.

SMALL, SELF-MANAGED TEAMS 2

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Case study

Haier’s 80,000 or so employees have been reorganised into over 2,000 self-organising units, creating competition, but also fuelling entrepreneurship.

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SMALL, SELF-MANAGED TEAMS – THE HAIER HOW

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Case study

“If, in the past, the mission of a company was to create customers, today the mission should be to engage customers from end-to-end,” said Zhang Ruimin, Haier’s chairman. “The bosses are not customers, why should the workers listen to them?”

USERS FIRST3

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Case study

Haier talks of moving from “complete obedience to leaders” to “complete obedience to users”. Its future priority is to meet the personalised demands of its consumers. In white goods the only colour is no longer white.

USERS FIRST – THE HAIER HOW

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Case study

The company is an open marketplace for ideas and talent. The traditional pyramid structure has all but flattened. “Haier doesn’t offer you a job but offers you the opportunity to create a job,” runs the company’s slogan.

CREATE A MARKETPLACE OF IDEAS4

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Case study

Haier has reinvented the role of managers to become entrepreneurs and “makers”. It has a “Win-win Model of Individual-Goal Combination,” which means that both employee and company objectives are on the same trajectory. Haier employees identify opportunities and an expert team is built to develop the product or service, meeting the user’s need.

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CREATE A MARKETPLACE OF IDEAS – THE HAIER HOW

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Case study

Management is a magpie science, borrowing ideas from psychology, sociology and elsewhere. Haier has proved adept at borrowing ideas and giving them a fresh and distinctive spin of its own.

BORROW AND ADAPT5

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Case study

After acquiring the Japanese company, Sanyo White Goods in 2011, Haier rejected the seniority-based compensation system it inherited, instead, it rewarded people according to how much value they created for users. Managers who created value found themselves promoted.

BORROW AND ADAPT – THE HAIER HOW

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Case study

Zhang describes a future Haier as a service-oriented platform of innovative groups and creative individuals with an array of Haier teams offering niche services to customers. In this model the CEO is a coordinator rather than a dictator, working with the consent of self-managed teams.

21ST-CENTURY MANAGEMENT

Summary

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Case study

Collaborating with “communities of interest” (users, academics, designers, competitors and anyone who has useful insight), helps creates bright ideas to develop new business models. This is the Haier way: “The entire world is our R&D department.”

It is 21st-century management.

21ST-CENTURY MANAGEMENT – THE HAIER HOW

Summary

The full article was published in London Business School Review Volume 26, Issue 1 2015.Visit the website: www.london.edu/lbsr