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December 23, 2022 - January 28, 2023
By creating more transparency, having systems that could communicate with each other — and by putting that information in the hands of employees — it unleashed a spurt of creativity.
“There is no such thing as a successful company, only one that successfully moves with the times.”
Within the microenterprises, employees — or, more accurately, entrepreneurs — would form miniature autonomous companies. As with any small company, those people working in it decided how they wanted to do things. They have their own profit and loss statements, and there was no more hierarchical structure.
It was as if they changed their organisation into the start-up ecosystem of Tel Aviv’s thriving tech scene.
Within the new network-like organisational structure, these microenterprises would have the freedom to do things the way they wanted to, and still have access to internal resources. They could collaborate with any other microenterprise, with relationships based on contracts, not hierarchy.
“I want to turn this business into an ecosystem of many small organisations,” he said. “So, what would be the role of a middle layer of management?”
That research shows that for leaders to be successful, they must demonstrate a willingness to ask for input, and the ability to listen. This phenomenon is called “Emergent Leadership”. The board, or anyone else, for that matter, needs to have the ability to “steer things in the right direction without the authority to do so, through social competence.” 9
Over the years, he too has evolved from boss to coach. Initially, he had to be more authoritarian to encourage people to change. Employees came to trust his intuition. He doesn’t tell people how to solve their problems, he asks questions to help them gain the insights they need. This helps them to solve future problems autonomously, and, hopefully, support others.
The servant leader is likely to understand that traditional directive leadership is mere vanity in this fast-changing world of shifting consumer preferences. Leaders are better off asking how they can help employees than telling them what to do.
“What it comes down to is this: employees who do the actual work of your organisation often know better than you how to do a great job. Respecting their ideas and encouraging them to try new approaches encourages employees to bring more of themselves to work.”
My advice to leaders who want to make such a transformation is this: be sure you are willing to give up your power.”
By refusing to set the course, top management freed employees from bureaucratic structures. It has created a scenario where microenterprises could set a course for themselves. It wasn’t enough. To really make the microenterprises thrive, enablers were needed. At Haier, those enablers are called platforms.
Zhang Ruimin believes that “either you own a platform, or you will be owned by a platform”.
Platforms facilitate partnerships and enable others to create value
Haier platforms provide support, resources, knowledge, and guidance. It’s their responsibility to create and maintain an impeccable brand. They determine consistent strategies, ensure microenterprises aren’t building the same products, and allocate funds.
The main tools to influence strategy and direction? Inspiring others to follow or invest in initiatives that fit their strategy.
Industry platforms bring together microenterprises working on similar products. They incubate and support the microenterprises. The industry platforms form a bridge between microenterprises that work in similar sectors by facilitating the exchange of resources.
Platform leaders cannot fall back on the old standard practices; they do not have formal authority. Instead, they convince others by demonstrating the benefits of their strategy.
The platform leaders must listen to the needs of the microenterprises. If the suggested strategies don’t align, they are free to start looking for other work. A new strategy will usually emerge.
“Rendanheyi is about platform and entrepreneur. The idea is that everyone can be a CEO. Within bureaucracies, mobility and co-operation are usually low. Their organisational structures allow people to have some flexibility to move around a bit, but Rendanheyi encourages employees to keep adjusting to their surroundings.”
All these platforms do the same thing: they facilitate business as the brand that customers know and trust. Whether those customers are other platforms, or customers waiting for their packages, doesn’t affect that.
The duty of microenterprises and platforms to communicate and interact with one another does not slow the process. Since all microenterprises have skin in the game and depend on good reviews, motivation is guaranteed.
Platform leaders often act as venture capitalists and strive to invest in microenterprises that can help them realise their goals.
To minimise risk and incentivise competitiveness, a common requirement is for new microenterprises to bring in funding, either their own resources or from outside investors.
“The system can review whether a project or microenterprise still has enough money, and this can all be checked and approved more swiftly than before. There is no need to pay in advance or worry about reimbursement. We have a Three Zero Goal: Zero Distance from our users, Zero Signatures, and Zero Delay.”
Haier’s approach to HR avoids centralisation. “Haier used to have HR and compensation departments with 2,300 employees,” Zhang told us. “Now there are fewer than 100. We’ll soon be down to 20. They are now simply providing a platform as a service.
Haier is getting closer to the point where there is no traditional HR department, but the work will still be done — just in a more flexible and dynamic way. Or as Zhang puts it: “The world is our HR department.”
The User Experience platform actively searches for that sort of information and shares it with the network. User needs arise, and microenterprises fulfil them. In some cases, the platform takes a more active role, that of opportunity creator, and formulates goals for other microenterprises to bid on.
The variety of services being offered by microenterprises on the platform is wide, no matter if they provide blockchain technology, market intelligence, host platforms, create crowdfunding campaigns or gather insights while repairing a clogged-up washing machine.
They all focus on building relationships and learning from users to take advantage of their feedback and seize opportunities.
The platform leaders aren’t involved in how microenterprises do their job. Instead, they listen to their users, the microenterprises, and try to take away any “pain” they are experiencing.
These microenterprises would become the entrepreneurial units that allowed Haier to thrive. Their main objective was to find opportunities, and the best way to do that was by getting as close as possible to the end-users.
According to Zhang, introducing the microenterprises was just the ticket to fully unleash the pent-up creative power of the workforce.
User, or customer-facing microenterprises, could be shops in rural areas or shopping mall franchises. They could be market intelligence experts, repair specialists, or the hosts of online forums. They are responsible for identifying problems and solving them by initiating a new product and delivering it to the user.
As with the Platforms, each microenterprise has a leader. Their role is to facilitate processes in such a way that the microenterprise reaches its goal.
They, and only they, are responsible for making sure enough money comes to pay salaries and buy resources. They are free to decide how to distribute rewards. If a microenterprise doesn’t manage to find enough income, it ceases to exist, and the entrepreneurs move back to the talent pool.
Either a group of entrepreneurs would come together, find an opportunity in the market, and pitch their ideas and approach platform leaders or other microenterprises to invest in their idea.
Alternatively, platform leaders would see an opportunity in the market and place details on the internal marketplace, allowing entrepreneurs to bid on them and formulate a plan on how to seize the opportunity.
The next step in the evolutionary journey would be to move outside Haier and become a spin-off company, often with the platform the microenterprise was part of, as one of the main shareholders.
Any microenterprise is free to contract, or terminate a contract with, any of the others, or with outside resource providers. This allows them to find external service providers, should they better suit their needs.
For such a system to function, it is essential that entrepreneurs can influence the outcome of their work 13. They need decision-making power, the right to negotiate contracts with potential clients, and the ability to develop new products without having to convince managers three layers up.
At Haier, information is easily accessible and actively shared. Entrepreneurs are educated and trained to understand the value of information that allows frontline employees to quickly respond to sudden changes in customer needs.
To encourage their frontline employees to behave as entrepreneurs, they needed to reward them as entrepreneurs.
On top of the basic, there’s the dynamic part of the salary which is directly tied to individual and team performance in a form of profit-sharing. This is based on how much customer value an employee creates, irrespective of position or experience.
By rewarding its entrepreneurs for creating value, Haier attempts to create benefit for all parties.
The top leadership team has the role of architect or servant leader for the microenterprises, and the platforms enable those endeavours. If it were possible to zoom-out, you’d see a network of thousands of loosely coupled nodes: the microenterprises.
The answers you will find might not always seem obvious and you might not understand all things directly, but you need to stay alert because clues that you gain at any point might be vital to understanding the plot...
The entrepreneurs-to-be are hired for their potential, and not for any specific role.”
