Ivey Publishing
Management Theory 2.0: Made (and Innovated) in China
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15 pages
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Ivey Business Journal
Haier’s chairman and CEO, Zhang Ruimin, took a failing factory with 600 unproductive workers and transformed it into an international appliance giant with over 50,000 employees. In this Ivey Business Journal interview, he discusses Haier’s Rendanheyi model, at the core of which lies a belief in small autonomous teams. Haier has been moving to free everyone in the organization to explore their entrepreneurial potential—to be a creator of value instead of just a salaried worker. In the past, he explains, quality was about meeting design metrics and industry standards, but now it’s about responding to customer feedback and releasing rapid product iterations. Haier has acted to break down the wall of middle management by evolving into a decentralized entrepreneurial network, with compensation based directly on market response. The breakdown of middle management has seen the creation of micro-enterprises. Once a great opportunity to expand a product or service emerges within a micro-enterprise, Haier spins off a new business unit to keep operations nimble. In fact, Zhang says, traditional leadership—balanced or not—might be harmful to a decentralized entrepreneurial ecosystem because it aims to influence decision making, instead of just facilitating it. Haier’s goal is to leverage the Internet of Things (IoT) and be the first organization to thrive on the customer service revolution the IoT era will deliver. IoT leaders will be companies that are able to instantly obtain information directly from product users and quickly act upon it to satisfy existing and emerging consumer needs.
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