Morning Star: Pioneering Self-Management in Manufacturing

The RenDanHeYi model, developed by Haier Group CEO Zhang Ruimin in 2005, is revolutionary management philosophy aimed at transforming traditional hierarchical corporate structures into highly adaptive, customer-centric ecosystems. Rooted in the belief that employees (Ren) and their entrepreneurial capabilities should align with customer needs (Dan) to create value, the model emphasizes individual accountability and dynamic organizational roles (HeYi). By dismantling conventional silos, the RenDanHeYi model fosters a network of autonomous micro-enterprises within the larger corporate entity, transforming the organization into a nimble startup factory.

To develop and share the idea of Zero Distance and its broader management philosophy of RenDanHeYi, Haier hosts an annual forum to celebrate the world's most progressive organizations. This September marks the 8th edition of the forum, taking place in Haier’s hometown, Qingdao, on September 20. Working with the Business Ecosystem Alliance and the Management Lab, the Haier Model Institute will release the inaugural listing of the progressive companies which are putting Zero Distance and related ideas into practice.

These organizations are characterized by:

• Zero Distance to customer | Decision what to build is based on insights from the marketplace

• Autonomy | Small teams with full decision-making autonomy enable speed in execution

• Shared Rewards | Everyone in the micro-enterprise participates in its financial success

For the 2024 inaugural ZeroDX awards, Haier approached us to list 50 self-managed organizations that showcase the principles of RenDanHeYi in how they organise their work. Morning Star is one of the 50 organisations we listed this year.

Introducing Morning Star

Founded in 1970 by Chris Rufer, The Morning Star Company is the world's largest tomato processor, based in California, USA. The company processes tomatoes into various products including paste, diced tomatoes, and purees. Morning Star permanently employs approximately 500 year-round employees, with an additional 2,000+ seasonal workers joining the organization for the peak harvesting season. The company operates three processing facilities in California, delivering superior customer value through teamwork, reliability, innovation and sustainability​.

With their pioneering work of dynamic organizational roles Morning Star is an excellent example of RenDanHeYi principles in the food processing industry. Their innovative management model dates back over 30 years. The company has no bosses and every organizational-design decision stems from one of two principles: all interactions should be voluntary and people should honor their commitments. The results is an agile organization driven by personal missions and peer-to-peer commitments that ranks top in their field of work.

Organizational Structure

Morning Star is renowned for its unique self-management organizational structure, which eliminates traditional hierarchical roles and titles. The company regards employees as professional colleagues, operating with high levels of autonomy and accountability. At the core of this unique organizational model is a crucial mindset following two main principles: First, people should not use force against others; all interactions should be voluntary. And second, people should honor the commitments they make to others.

Customer Centricity and Autonomy

Each colleague has a personal mission aligned with the company’s Mission, Vision and Principles, and all roles are designed to be dynamic and self-directed. This approach fosters a culture of trust, transparency, and continuous improvement, encouraging colleagues to take ownership of their work and contribute meaningfully to the company's success​. Colleagues exercise their inherent power to address customer needs promptly and innovatively, ensuring a high level of responsiveness and personalized service. This autonomy helps Morning Star maintain strong, long-term relationships with its customers, enhancing loyalty and trust​.

An excellent example of customer centricity is the way a member of the team at Morning Star responsible for obtaining new sales opportunities influenced the company’s distribution network. Through conversations with customers, he learned that customers located in remote destinations felt they were paying too much for Morning Star products. After consulting a few colleagues, it became clear that multiple distribution centers could solve the problem. Fast forward; a few months later, this team member and his colleagues were setting up distribution centers around the country.

Internal Culture and Colleague Engagement

Morning Star’s culture is deeply rooted in principles of self-management, transparency, and mutual accountability. The company’s Colleague Letter of Understanding (CLOU) outlines personal missions and responsibilities, fostering a sense of ownership and alignment with organizational objectives. It makes expectations around roles explicit and makes it easier for everyone to know who does what in the company.

The process for activating a CLOU includes the following:

1. Each colleague negotiates a CLOU and documents the corresponding ongoing commitments affecting the work of their colleagues. Most colleagues self-select between 7-12 fellow colleagues with whom they work closely and negotiate CLOU commitments.

2. Each CLOU identifies the commitments by and between colleagues: services, deliverables, resource requirements, goals and performance metrics called Steppingstones (considered steppingstones toward perfection whether or not perfection is ultimately realized).

3. Colleagues reference the CLOU to hold themselves and others accountable for agreed upon commitments. It is a dynamic instrument that can be re-negotiated at any time.

Compensation at Morning Star is determined through an annual self-assessment and feedback process where colleagues negotiate their own salaries with local compensation committees based on their contributions and peer feedback. The compensation process promotes transparency, fairness and candor by providing a forum for full and open discussion of performance.

Another key collaborative process is Gaining Agreement. Whenever a conflict, disagreement, or problem arises, Morning Star colleagues have an affirmative obligation to engage in direct communication. The process is simple:

1. When a colleague senses a difference with another colleague, they directly approach that colleague with a request for change in a private conversation. If desired, colleagues may consult with a chosen ombudsman to provide private, confidential advice.

2. Difference not resolved? The colleagues may engage the services of a third colleague to provide a fresh perspective on the request for change. The singular role of the third colleague is to give his/her opinion and advice, not to judge. It's still up to the two original colleagues to find common ground.

3. Difference still not resolved? A panel consisting of 3-7 people with various perspectives gets involved to provide additional opinions and advice. Once again, they are there to offer their best advice, not to render judgment.

4. Difference still not resolved? The colleagues have agreed in advance, by subscribing to the Morning Star Colleague Principles, to document their differences in writing and submit them to the company president for possible further investigation and decision.

5. Most colleagues we spoke to believe it is rare that disagreeing colleagues engage the company president (or a designee) as a final decision maker. Interestingly, there is no published information about this, since colleagues only engage in disagreements that directly affect them as participants, willing mediators, or ombudsmen. The vast majority of disagreements are handled exclusively by the people involved.

Conclusion

Morning Star exemplifies a forward-thinking organization that successfully integrates self-management principles with a strong focus on customer satisfaction for over 30 years now. With an innovative way of work that follows closely the principles behind RenDanHeYi, Morning Star continues to lead a very traditional sector and to prove self-management can work in surprising environments.