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December 23, 2022 - January 28, 2023
When an entrepreneur joins the talent pool, they have three months to find a suitable goal. If they can’t, out they go.
Hiring for the talent pool is much more than looking at a resume; it’s a search for certain skill sets.
Unlike the performance systems in more traditional organisations, it allows for self-monitoring and motivates internal collaboration — and competition. At Haier, all individuals and teams are measured on productivity, profitability, and customer satisfaction, with peer ranking based on these metrics, available to all staff via digital tools.
By opening-up this ranking system, employees can see which scores were given, and why. Outlandish scores will stand out, and probably attract direct feedback — or a lower score for themselves when the time comes.
Firing people after a few bad ratings might sound harsh, but in practice colleagues are usually keen to help one another. That drive to help is something that can be partly explained by the collective esprit — which is quite common in Eastern cultures.
Since microenterprises and entrepreneurs have aligned incentives, they collaborate. Having a failing colleague in your midst is not beneficial and might directly influence the achievement of your goals.
“We help the microenterprise to be successful because they are connected to us,” replied one. “Sure, if a microenterprise consistently fails to meet its targets, we could try to find a replacement. But it’s better to help the original because that microenterprise knows us. Getting a new one up to speed will take time and delay the whole process.”
This eagerness to learn from mistakes is part of Haier’s culture. It’s one of the secrets of its success, and a stimulus throughout the company. By combining peer-ranked performance systems to create insights into one’s behaviour, and having a culture in which learning is seen as a vital element, Haier enables and facilitates personal and professional development.
Haier’s solution might not be perfect, but it does avoid the trap of making a manager responsible for judging your performance. Scores are given in more transparent ways by everyone in the organisation, and most importantly, the scoring is seen as equitable.
As well as having autonomy, he has a career with promise. It can be a profitable one, thanks to Haier’s remuneration system. This is a driver of innovation — and success. It motivates employees to keep pushing the organisation forward. Haier is growing quicker than many of its competitors — and that was true even while the world was being shaken by a pandemic 15.
The reward mechanism is built around performance, and more precisely around the value they add for the customer. Value will be determined, along with the size of the stake for those who manage to add that value, during the bidding process. The thresholds one must pass to receive a higher income will be clearly outlined.
Instead of rewarding previous success, negotiation skills, good attendance or (even worse) popularity with the right people, Haier sticks to its guns: rewards are linked to added value.
Trust is essential. Employees must be counted on to make the right decision, and that is most likely if what’s good for the company is also good for the employee. With that in mind, Haier developed its customer-paid-salary system.
It’s not a case of giving employees a job, it is providing them with a chance to become successful. Haier simply ensures that they are rewarded when they do well — something that in other companies can’t be taken for granted.
In some microenterprises, entrepreneurs can choose their leader, or fire that leader if they feel he or she lacks the necessary skills.
But it’s better to focus on helping someone, rather than sacking them. It’s the responsibility of the entrepreneurs to make sure their leader is the best person to do the job.
The reward system has proven to be a true catalyst for entrepreneurship.
With a tight coupling of user happiness and higher rewards, this system creates a bridge. Entrepreneurs are, for more than intrinsic reasons, motivated to do what’s best for the users.
The pair reasoned that having “live” financial data would make it easier for microenterprises to respond to sudden changes in customer behaviour or rising costs. Re-engineering the financial systems boosted the company’s transformation, as more information became available.
“If your microenterprise shares information about effective practices and others take it on board, you have the chance to win an award. You get to hoist a flag with your name on it.”
Zhang introduces best practices he has seen elsewhere, and encourages attendees to follow his lead. He encourages experimentation — and the sharing of results, whether those are good or bad.
The objective is to improve mechanisms using the daily activity reviews. Leaders of microenterprises and platforms are expected to stimulate excellence.
Microenterprises’ success and failure stories are grist to the mechanism’s mill. Attendees can put forward potential solutions — and challenge approaches if they think that will help.
Resources are in place to ensure the implementation of resolutions. Ideas that emerge will be covered by the Corporate Culture Centre and published in Haier Ren, the staff newspaper. Information is also disseminated via platforms and the company’s in-house TV channel.
Knowledge transfer is the pooling of wisdom; entrepreneurs often have multiple roles, and this process is a natural form of corporate education. It stands or falls with the motivation of employees to learn and share experiences.
“When you have something that is exciting, you want to share it. You are part of a bigger network that can benefit from the knowledge you have. If you want to reach your goal, all microenterprises must perform as well as possible. Sharing knowledge helps them improve.”
The company trusts and encourages its entrepreneurs to educate themselves. Platforms provide suitable options, but they work only when aligned with entrepreneur needs.
The problem is that targets that aren’t perfectly aligned can cause more harm than good. The same is true of targets that aren’t using the correct criteria, or fail to recognise the essential work that somebody is doing.
“When a measure becomes a target, it ceases to be a good measure.” A faulty measure leads to the focus shifting from the goal to the measurement.
As Zhang puts it: “We want to create a rainforest, not a walled garden. In a rainforest, a tree may die, but it adds to the health of the ecosystem and enables other species to thrive.” In a walled garden, a few crops may grow, but they can be destroyed if snails find a way in.
Scenario thinking means moving things ahead while thinking laterally instead of going for the most obvious solution.
Through communication, we create a community. If it’s people-orientated, the road will be wider. If it’s ‘thing-orientated’, the road will be narrower. We analyse various needs.”
“We should let the user choose the whole set. Based on this, we can integrate other services such as meal suggestions and food purchasing by working together with partners. We think from the users’ point-of-view. They all have different needs, and by communicating with them we create a community. And there will be more needs to be met as we go forward.”
By being in direct contact with the users and these people sharing their experiences, Wang Jie and her colleagues could quickly see changes or opportunities by analysing user needs and sharing those insights with the rest of the EMC. This allowed them to improve existing products, or create new ones.
Miniscule improvements can be crucial to improving everything by one percent per day.
The idea behind it is that mass collaboration changes everything. By opening the doors for others to help innovate and share knowledge, world-class resources and wisdom can be exchanged easily while at the same time tapping into a global pool of creative thinkers.
We must do so on the foundation of human value maximisation so that people are granted autonomy while being internally anchored and externally fluid. When such a balance is accomplished, the model can self-adapt in a fast-changing environment and stay relevant to the times.
Culture is intangible. It’s a pattern of basic assumptions that help to cope with all challenges and situations, from how people greet one another to what is needed to achieve a goal.
“Without culture, a model would be without soul; without a model, the culture would be nothing but a castle in the sky.”
The power is with the customer. We’re here to serve that customer, organising ourselves as efficiently as possible to meet those needs and make sure everything we’re doing is right.”
“I became more of a coach: someone you can talk to instead of someone who tells you what to do. In practice, something interesting happens. I spent more time with the smaller microenterprises that were trying to gain traction than I did with the larger ones with an established model.”
“What’s typical of conglomerates is that they focus on feeding the ‘strong child’. The weak ones, they just sell off or starve. And you know where that gets you? Nowhere. “When larger microenterprises need something, we meet, but not very frequently, whereas I meet with the small microenterprises quite a bit.
Using the foundations of the microenterprise structure allowed GEA to adopt other elements. Decision-making moved down, enabling those closest to the end-user to have input.
Daring to fail is important. Without this, people are not prepared to take the necessary risks to find new solutions.
But, with Haier championing zero distance, the focus shifted from product to customer. Superior experiences, the argument runs, bring higher commercial value.
Tianbao has shown that to implement Rendanheyi, businesses should choose to adopt only the parts that will work for each specific situation.
Holacracy provided Zappos with a tool to break free of traditional organisation and introduced a shared vocabulary, a terminology to help people understand what it means to be self-organised and self-managed.
As part of the solution, each circle had to manage its own budget and determine the services it would provide. These can be within the company, or involve outside clients.
Zappos’ units operate like companies, with far-reaching decision-making rights and responsibility for their own P&Ls.
