INSEAD, the Business School for the World, welcomed Mr. Zhang Ruimin, Chairman and CEO of Haier Group, to its Europe campus in Fontainebleau, France. Zhang is one of the world’s most recognized influential management thinkers and the innovator behind the Rendanheyi management model.
In a lecture attended by more than 400 MBA students, alumni, faculty and staff, Zhang introduced Haier’s Rendanheyi model in detail and spoke regarding the big value this model creates for customers, employees and the enterprise. He outlined how Rendanheyi enables Haier to maintain the vitality of venture enterprises in the Internet Age.
Founded in 1984, Haier is a leading global white goods brand and remains committed to create value through pioneering work and innovation. In 2017, Haier’s global revenue increased 20 percent year-on-year to 241.9 billion yuan (USD 37.2 billion) while employing over 76,000 employees globally. In 2018, Haier was listed as one of the world’s best employers by Forbes.
The Rendanheyi model was introduced by Zhang in 2005. “Ren” refers to employees; “Dan” refers to user value; “HeYi” refers to the integration of employees’ value realization and user value creation. This model means that each employee can create value directly for users (customers) while also realizing his or her own value. Employees do not serve the position itself, but instead serve user demands.
Haier’s doctrine in evolutionary innovation and construction of an ecosystem for cultivating world-class talents who generate continuous value combines individual goals to form a win-win culture. It is also the secret to the company’s successful evolution from a small household name into a competitive global enterprise.
How businesses can disrupt with the Rendanheyi model
During his lecture, Zhang elaborated on three important ways where businesses can disrupt with the Rendanheyi model.
First, the radical disruption of concepts where employees are treated as autonomous individuals and employers are the nodes of a network. By adopting Rendanheyi, Haier has fostered great entrepreneurial talent and achieved significant financial performance. Haier’s incubation, investment and acceleration platform, HCH Ventures, had gathered 2483 entrepreneurship projects by the end of 2017. 256 projects had moved on to incubators and 4325 entrepreneurship and innovation incubation resources were available on the platform. Haier has established 24 incubators in nine countries around the world, providing rich, innovative resources for entrepreneurs.
Second, the disruption of traditional models such as the bureaucratic management model, marketing model and revenue model. In Haier, the administrative organization was transformed and the middle management level was removed. The number of registered employees has decreased by 45 percent since its peak, and the Haier ecosystem now creates more than 1.9 million work opportunities. The company has become a networked organization where there are only three types of people: the platform owner, the microenterprise owner and the entrepreneur.
Third, the disruption of linear management where the new modus operandi is based on a self-driven, non-linear network and aims for a “3-zeros” goal that includes zero distance to users, zero delay in experience and zero-signing within the process.
He concluded, “Organizations are similar to gardens with beautiful walls but these boundaries must be ever-expanding. Employees must stay relevant with the times and constantly renew their abilities to create value for their users (customers). At the same time, they should view the customers as co-creators and use the customer feedback to drive their goals. The pre-requisite is that employees must have the space and opportunities to unleash their full potential.”
The winning formula: from products to eco-brands
Zhang also introduced his ideal of the eco-brand based on the Rendanheyi model and his strong conviction that the age of Internet of Things (IoT) would bring an even greater economic impact than that brought by the Internet age. During the lecture, he shared the guidelines of creating an eco-brand based on the “3E” model, Ecosystem Revenue and Ecosystem Brand.
Partnership between INSEAD and Haier
The visit of Zhang has deepened the relationship between Haier and INSEAD, where several collaborations are ongoing, including joint research and an upcoming case study and academic paper on “The Internationalization of Haier’s Rendanheyi Organization Innovation Model” led by Professor Monteiro.
Haier will also contribute a full chapter on entrepreneurial talent for the upcoming edition of the Global Talent Competitiveness Index (GTCI) 2019, which will be launched by INSEAD at the World Economic Forum in Davos in January 2019.― The Business School for the World