Net Protections: Fostering Autonomy in Financial IT Services

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. Net Protections is one of the 50 organisations we listed this year.

Introducing Net Protections

Net Protections is a trailblazing company in Japan's Buy Now, Pay Later (BNPL) industry, a sector that has seen significant growth globally with successful companies like Affirm, Klarna, and Afterpay. Founded in 2000, Net Protections has been at the forefront of this financial revolution, expanding its services both domestically and internationally. The company went public in December 2021 and boasts an annual transaction amount exceeding 3.8 billion USD, serving 1 in 7 people of the entire Japanese Population. Today it employs more than 400 members and continuously reinvents not only its value proposition, but also its organizational design.

Net Protections is a strong example of RenDanHeYi principles in the finance industry with its decentralized structure, customer centric product development and culture that underlines autonomy, co-creation and personal development.

Organizational Structure

During the first 13 years of its operations, Net Protections maintained a hierarchical structure, which began to show strains as different internal cultures emerged. This is why in 2013, responding to internal challenges, Net Protections undertook a comprehensive cultural overhaul. The company revised its vision through an inclusive process involving all members. This led to the creation of a new mission titled "Create New Standards," along with seven vision statements and five core values. This phase also saw a significant turnover, with over half the employees leaving, leading to a more unified and committed workforce.

In 2018, Net Protections introduced the "Natura" evaluation system, which abolished traditional management roles and introduced "Catalysts" to support team development. This period solidified the company's shift towards a collaborative, autonomous working culture.

The Natura system represents a radical departure from conventional management practices. Its primary objectives are to enhance performance, individual development, and well-being through collaboration rather than competition. The system promotes psychological safety and mutual support, with members working autonomously and self-managing their responsibilities. Under the Natura system, the traditional manager role is replaced by "Catalysts," who support team development and disseminate company information to its department rather than take responsibility for results. This distributed responsibility model ensures that the team, rather than an individual manager, is accountable for outcomes. Official roles and department heads remain for governance purposes.

Approach towards Customers

Customer centricity is at the heart of Net Protections' operations. The company continuously seeks to understand and address the needs of its users by developing intuitive and reliable payment solutions. Their BNPL service, in particular, is designed to offer consumers a flexible and convenient payment option without the burden of immediate financial outlay. Net Protections employs advanced data analytics to gain insights into customer behavior and preferences, enabling them to tailor their services to meet evolving demands. Regular feedback loops and customer satisfaction surveys are integral to their approach, ensuring that the user experience remains a top priority.

Organizational Culture

The autonomy at the company is further enhanced by recruiting people who are self-motivated, passionate about self-development, willing to take responsibility, collaborative and integrity driven.

One of the most authentic practices at Net Protections are the Working Groups. Since 2012, Net Protections has utilized "Working Groups," where members dedicate 20% of their working hours to projects of their choosing. This program fosters autonomy and innovation by allowing members to explore interests beyond their primary roles, covering areas such as recruiting, employee training, and new business planning.

An example of a valuable practice that has emerged via the Working Groups is the "Fami-Tsuku" system, which creates virtual families to mentor new graduates. When a new graduate joins the company, a virtual “family” with 5 or 6 members are formed to be a mentor. These families meet regularly to build relationships and provide support, fostering a strong sense of community within the company.

Net Protections has also been very intentional when it comes to its compensation mechanism. The new system emphasizes a culture of mutual support and individual development, shifting from a previous focus on fair distribution. Basic salary is determined through competency feedback from a 360-degree evaluation, while bonuses reward output. Salary can increase automatically every six months within fixed ranges or by raising the employee's grade, decided by a company-wide evaluation committee using monthly 1-on-1 reports and feedback from higher grades. This system supports skill development, especially for young employees, allowing for steady growth through automatic increases and significant rewards through grade increases. Full transparency regarding salary ranges for each grade is maintained.

Conclusion

Net Protections' journey from a traditional hierarchical organization to a progressive, autonomous company serves as a compelling case study in organizational transformation in line with the principles behind RenDanHeYi. By fostering a culture of collaboration, transparency, and continuous development, Net Protections has positioned itself as a leader in the BNPL industry and a model for other companies seeking to innovate their organizational structures.