A Video Chat With Haier CEO Zhang: COVID-19, Purpose, And Rendanheyi

Understanding Haier

We first visited Haier in 2017. Our current work researches their way of working, and shares it with others around the world. Our aim? To describe a powerful example of how work can be more human, engaging and autonomous.

Our collaboration includes:

• Continuous research: This includes academic and practical research, plus visits to Haier sites around the world. We have unique access to people in many locations and positions. It gives a wide perspective on how things work (and don't), and which aspects are evolving.
• Blogs + book: We share what we learn through blogs and a book to be released next year giving more detail on how Haier works. For updates on the book, subscribe here.
• Site visits: Our collaboration includes offering individuals and organizations the opportunity to learn directly from Haier. We will organize site visits. You can conduct your own research, including interviews with Haier employees. For information on these visits, contact Ellen at [email protected].

Video interviews

We recently organized two webinars on their Rendanheyi model (Haier's way of working). This was in conjunction with the Haier Model Research Institute, the Thinkers50 and Boundaryless. Presenters included experts from Haier, IMD professor Bill Fisher, Thinkers50 founder Stuart Crainer and others.

The first discussed Haier's organizational approach, it's fight against bureaucracy, and internal insights from Sylvia Guan, Senior Researcher at Haier. You can see the full webinar here:

The second webinar focused on the application of Haier's way of working beyond China. Insights from GE Appliances CEO Kevin Nolan and Haier Europe CEO Yannick Fierling helped us understand how local Haier companies adopt the principles of the Rendanheyi model outside China. They discuss frankly the challenges and barriers to change in other environments.

See the full conversation here:

Last, but not least, we share excerpts from an interview I conducted with Simone Cicero and Haier CEO Zhang Ruimin. We discussed purpose, handling COVID-19 and ongoing changes at Haier.

A stand-out for me is where Zhang Ruimin talks about the change to Haier's HR department. It illustrates how they work differently to traditional enterprises.

Redesigning HR

Zhang Ruimin: "Haier used to have HR and compensation departments with 2,300 employees. Now there are less than 100. It'll probably be down to 20 by the end of this year. What they are doing now? They are simply providing a platform as a service. To further illustrate, previously you'd ask HR to recruit certain types of talent. HR would start searching and also set the pay. Now this is no longer needed."

"Why? Because in Rendanheyi a core principle is to align value creation and value sharing. The amount of value someone creates in the market for the user is aligned with the amount of value creation that is shared with them. No one else is needed in between to tell them how much value to create and how much they will be paid. In traditional companies there's a disconnect between the value people create and the value they get, because compensation is pre-determined. At Haier, that's why we don't need middle management. Everyone is directly connected to the market."

The changing role of leadership

"It reminds me of the reformation in the Renaissance. The pope doesn't speak for god. Who is god in the market? Users. As a leader you don't speak for users. As long as everyone creates their own users they can create and find their leader. Now, senior corporate leaders have a different task. They should no longer command and control through middle managers. Instead they should help microenterprises create value by vitalizing and energizing them. This becomes the task of senior leaders."

"As to who is now responsible for developing strategy and providing directions, I see senior leaders as responsible for creating a rainforest. To create a rainforest you can't decide which trees you want and which ones you don't. You simply provide nutrients like water and sunlight. The rest is left to self-evolution. Of course if you believe something is wrong, you can discontinue the water and nutrients."

More nuggets of wisdom from Haier are to be found in the interview.