Zhang Ruimin, chairman and CEO of Haier Group, delivered a speech at the Institut Européen d'Administration des Affaires (INSEAD) on Nov 23, shedding new light on the concept of the Internet of Things (IoT). In his 90-minute speech titled "Create a World-class IoT Model," Zhang elaborated on how the Rendanheyi Model overturned traditional management theories, how Haier inspired the innovative spirit in the organization with user needs, and built an ecosystem brand for the IoT era which is created and shared by employees, users and stakeholders.
Deputy Dean and Dean of Innovation Peter Zemsky said after the speech, that in the past several years, INSEAD has been studying the Haier Model, and this speech intrigued the audience's further interest in the Rendanheyi Model and the 3E Model, which would bring about more studies of the Haier Model around the world. Professor of Strategy Felipe Monteiro said that Haier's organization innovation model is the global benchmark when it comes to bringing entrepreneurship to large corporations. As a world class business school, and one with the largest Master student bodies, the INSEAD would further explore joint research opportunities with Haier. They believe that the Chinese management model would be learnt in Europe just as the Japanese model has been before.
Change is happening
INSEAD is one of the most influential independent business schools in the world, and it is ranked the No.1 business school by the Financial Times; and its MBA program was ranked No.1 by the Bloomberg Businessweek. Many CEOs of top European companies came from this school. Zhang's speech was broadcast live on its the Singapore campus at 12:00 noon local time.
In the speech, Zhang explained how Haier is subverting the management model under the traditional bureaucracy through the practice of "delegating three powers," "the 3-self organization" (self-employed, self-organized, self-driven), and the "paid-by-users system". Since its establishment 34 years ago, Haier constantly reviewed its practice along the way. As a result, the company maintained the dynamics to live up to the time, and to competition in the market.
As the president of INSEAD, Ilian Mihov has always followed the vision of INSEAD, which is to bring about value-driven business leaders with a global perspective. Seeing the significance of Zhang's management ideas and practices in the IoT era, the school invited him to give the lecture. Zhang said the Rendanheyi Model reflects Haier's value pursuit in the IoT era. The company believes that enterprises are born for the market, that employee value and user value should be well combined, and that employees are the source of innovation for enterprises. The subversion of the traditional organizational method and the innovative value system construction are great explorations, and they also bear significant practical meanings.
In the global market, a revolution of going digital and building platforms is happening to get ready for the era of IoT. Haier's practice helps management scholars to better understand the nature of IoT, which is without border, without standard pricing, and without set orders. From silos to entrepreneurial platforms, bureaucracy is subverted; from transaction customers to interactive users, marketing is redefined; from product revenue to ecosystem revenue, the theory of income is rewritten. Haier has redefined the boundaries of the enterprise, the concept of marginal cost, the structure of linear management; and Haier has built the flexible and effective self-organization by the self-driven network featuring zero distance with the user, zero signature during the process, and zero delay in customer experiences.
Starting the new era
On Sept. 20, Haier held the 2nd International Rendanheyi Model Forum, marking the 14th anniversary of the Rendanheyi Model. The 3E Model ignited the research in academia, in the business and consulting circle, as well as in the media. Rendanheyi entered a new era of global duplication.
In the 3E Model, Haier subverted the traditional bureaucracy with its open innovative spirit, and received acknowledgement in the management field globally. In November, the international edition of the Harvard Business Review published the "The End of Bureaucracy" as its cover article. This article is a case study of Haier and introduced the new era of management. Haier's practices support the opinion of the authors Gary Hamel and Michele Zanini, two world-renowned strategists from the MLab, that bureaucracy has come to an end.
The Rendanheyi Model overturned corporate bureaucracy, which has been around for more than 100 years. Haier took the lead in exploring a management model that truly suits the internet era, and launched a new era of management studies.
On Nov. 30, Zhang will be invited to speak at the Global Drucker Forum in Vienna, Austria. On the occasion of the 10th anniversary of the Forum, global management experts will gather to discuss the topic "Management, in People's Dimension" and explore whether leaders in the 21st century should be adept in understanding people-related management technology just as they do with the latest scientific discoveries. By then, the Rendanheyi Model, with its emphasis on human value, will provide new insights for the community to challenge the prevailing management pattern, and develop new management model for the IoT era.