Chinese management reform: shunned by the West - Bill Fischer

Bill Fischer

When Western companies discovered new management systems in Japan like Just-In-Time in the 1980s, they applied it fast,despite initial misgivings.But when they see now new ways of decentralizing corporate structures in Tencent and Haier, they are reluctant to take it serious, says Haier-watcher and IMD professor Bill Fischer, co-author of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform at AP.

AP:

Haier has tried to speed up product development by using the internet to ask potential customers for suggestions and feedback, an approach taken by Chinese smartphone brands. The company says a new appliance can go from drawing board to market in as little as one year, down from more than three. 

Zhang (Ruimin)'s management changes "are more impressive than we see anywhere," said William A. Fischer, a professor at the IMD business school in Switzerland who has followed the company for a decade. He co-wrote the 2013 book, "Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform." 

"He trusts his employees to play more of a leadership role," said Fischer. 

Fischer said a group of European executives he took to Haier headquarters two years ago refused to believe its decentralized style could work. 

"I was struck by how daring Haier was in their thinking. And the people I was working with were hostages to very traditional ways of working," said Fischer. 

The strategy appears to be paying off. Last year's profit rose 12.8 percent from 2015 to 20.3 billion yuan ($2.9 billion) on revenue that increased 6. 8 percent to 201.6 billion yuan ($29.3 billion). Transaction volume on its business-to-business and consumer-oriented internet platforms rose 73 percent to 272.7 billion yuan ($39.6 billion).

More on Haier at AP.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How Haier reinvented itself four times - Bill Fischer

Bill Fischer

Haier is for years the largest white-good manufacturer, not only in China, but worldwide. IMD professor Bill Fischer explains how the first Chinese company to go global did so by unconditional focussing on their customers, in Strategy Business. How Haier reinvented itself four times in 30 years.

Bill Fischer:

Much of the credit for Haier’s success accrues directly to Zhang Ruimin, the company’s CEO since 1984. Throughout the 30 years of his tenure, his sharp focus on customer service leadership has given the company consistency even as it propels Haier through dramatic changes. Zhang was the leader who proposed that Haier should never see itself as just a manufacturer of products, but instead as a provider of solutions to its customers’ problems. In the earliest years, that meant bringing new levels of quality and reliability to Chinese products. Later, it involved increasingly sophisticated forms of customization and new types of services. Through its simplicity and continuity, this principle has given all employees a reliable compass with which to make decisions, even in the face of disruptive market challenges such as new technologies or new competitors. 

To accomplish its goal, Haier has consistently cultivated and rewarded high-quality talent; the company has been a magnet for many of China’s most capable engineers and businesspeople. This approach is especially noteworthy within China’s cultural and social context. In a country that was just beginning to emerge from a Maoist mind-set when Zhang took the helm, the idea that success depended on the entrepreneurial efforts of individuals, recognized for their differences and rewarded for their achievements, was relatively unfamiliar. Haier has thus invested a great deal, especially for a Chinese company, in training its employees and demanding innovative ideas. 

Despite the success it has achieved, and its willingness to stick to one core value proposition (and one CEO) since the 1980s, the company has never become complacent. Zhang established early on that changes would be a way of life, not soon-to-be-completed episodes that must be traversed. “The only thing that we know is that we know nothing,” he says. “If you don’t overcome yourself, you will be overcome by others.” 

Indeed, Haier has reinvented itself at least four times. The first reinvention, in the 1980s, was the decision to differentiate the company by the quality of its products. The second, in the 1990s, was the adoption of consumer-responsive innovation, starting with (but not limited to) products for particular customer needs. The third, which took place in the 2000s, was the reorganization into a bottom-up structure, in which self-managing teams led decision making. The fourth, going on today, is the reinvention of Haier as a truly Internet-based company, open to the world in a way that few other companies have attempted, let alone realized.

Much more in Strategy Business.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more experts on branding at the China Speakers Bureau. Do check out this list.

Bill Fischer is also the author of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform
 

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The organization of disorder at Haier - Bill Fischer

+Bill Fischer 

White goods producer Haier has an amazing story of change, where its CEO Zhang Ruimin reinvented the company, three times, tells IMD-professor Bill Fischer in CKGSB Knowledge. Fischer is co-author of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform.

CKGSB Knowledge:

Q. One of the things Zhang Ruimin did was break the company into different bureaus, effectively creating internal competition. How does that work?  

A. If you are moving from ‘responsiveness’ to ‘intimacy’, in ‘responsiveness’, you need to listen very well to the customer and respond quickly. With ‘intimacy’ you need to get so close to the customer that the slogan was ‘zero distance to the customer’. That means you need to change the way in which you go to market because you are now dealing with ideas rather than just customer responses to offerings. You need to have a factory system that is infinitely responsive because you don’t know what’s going to come out of this. You raise uncertainty multifold. You need to build an organization that’s capable of dealing with unforeseen uncertainty. 

In order to do that [Zhang Ruimin] needed to really free up the skills of his workforce because they had no idea what the customers were going to tell them. They needed to have an organization that was fluid in terms of how it moved to changes in the marketplace. He recognized that the existing departmental, functional, silo-ed organization would be too slow to do that. So he had to hire new skills, and then he had to put them into an organization that was able to move quickly and coherently the way the customer wanted. He had to take out the existing organizational units because they were historical, rather than anticipatory. What they settled on was an internal labor market where you literally auctioned off opportunities. So the slogan is “Haier doesn’t offer you a job but offers you the opportunity to create a job.” 

If you are going to do that, you need a labor market inside where people bid for work and then assemble teams to address that work. Those teams dissipate at the end, and go back into the labor market rather than remain in place because of historic success. If you do that, you need a mechanism for choosing a leader. So they use performance, they appraise business models and promises to pick leaders. But once that leader is in place and assembles a team, his or her team appraises their performance every quarter and votes [on whether] they want to keep them in position or not. Everything changes. It’s the organization of disorder that allows them to perform so well.

More (including a video interview) at CKGSB Knowledge.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more experts on innovation at the China Speakers Bureau? Check our recently updated list.

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Betting on quality pays off for Haier - Bill Fischer

Bill Fischer

Among the Chinese companies becoming fast household names among global players, Haier was one of the first to enter the word arena. Haier´s CEO Zhang Ruimin has put his bets early on quality, explains IMD professor Bill Fischer in The Corner, and that explains why he is winning now.

The Corner:

Zhang had it all figured it out, explains Bill Fischer Professor of Innovation Management at IMD business school in Lausanne, Switzerland.  “Zhang thought at some point China would be a market where quality would be appreciated. He believed (in such market) there would be brands whose one of their features would be quality as a differenciator.” 

And so, Zhang began to make small and progressive changes to develop a brand capable of fulfilling the promise of quality, always with the guarantee of an excellent costumer service. “He succeeded and foreign brands started coming into China to compete against Haier,” says Fischer. The ideal scenario for China would be that many local brands could achieve Haier’s reputation and capacity for innovation. And thus they’d become Ambassadors of a new made in China, most sophisticated and exclusive... 

According to the philosophy behind Zhang’s vision for Haier, the quality of products is strictly linked to management. And therefore, product innovation is a logical outcome of management innovation, explains Fischer.  Haier has now five innovation and R&D centers in China, Japan, Australasia, Europa and the U.S.A. intended to develop a global working ecosystem.

More in The Corner.

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Haier: organizing entrepreneurs, not workers - Bill Fischer

+Bill Fischer 

China's electronics manufacturer Haier has become one of the world's leading firm in renewing its way to organize production. IMD-professor Bill Fischer explains in Entrepreneur.com how workers are organized like entrepreneurs, working on their own fate.

Entrepreneur.com:

Fischer: Zhang Ruimin, the chief executive officer, will tell you there's a very Confucian element in what they do because there's respect for order, there's discipline and people get along because they have a shared tradition. I will tell you that it stems from choices by management that created this culture. The managerial choices at Haier are very thoughtful. They're all aimed at the vision and the vision has been consistent for 30 years. I think you can do this even if you're not Chinese. 

Entrepreneur.com: The official work hours at Haier are 9:00 a.m. to 6:00 p.m., six days a week, but teams rarely leave before 8:00 p.m. Investment bankers and entrepreneurs in United States can relate to those kinds of hours, but how would this go over at most U.S. companies? Fischer: The difference is the people at Haier think of it as working for themselves. They're really running small businesses under the corporate umbrella. What Haier has done is say to people: ‘You are the masters of your own fate. You're going to run this business and you'll succeed economically as a direct result of your performance." There's a saying at Haier that Haier doesn't give you a job, it offers you an opportunity. That's different from serving your time or clocking in and clocking out. These people really feel they are CEOs of small businesses and they are, actually. 

Entrepreneur.com:Yet, this isn't a free-for-all.

Fischer: Not at all. Performance is being measured in the marketplace and it's also being measured by the colleagues who have a direct financial stake and career stake in the outcome of the unit's performance. It's a very performance-driven atmosphere. At Haier you get every day a sense of what your total salary will be based on the performance of your unit. Every day they're facing those realities for better or worse. One thing I hear a lot from people is "We could never give up that much control." My sense is you need discipline and creativity but they don't have to be mutually exclusive. The most creative organizations I see are also very disciplined.

More in Entrepreneur.com

 Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout 

What is behind due diligence firms in China, we asked ourselves as one of the leading voices in the industry, Peter Humphrey was arrested last summer for illegal business practices. The +China Weekly Hangout will discuss due diligence of the due diligence firms on September 25. You can read our announcement here, or register for participation at our event page. Joining us from Taiwan is Miguel De Vinci (aka 李洛傑).

China's companies are going global, including its internet giants. The +China Weekly Hangout joined the debate on September 5. Should Facebook, Twitter and Google+ worry now Tencent, Baidu, Sina, Alibaba and Xiaomi have plans to expand globally. Not yet, said investor +William Yung, media-expert +Paul Fox and +Tech in Asia editor +Steven Millward. Well, maybe Whatsapp should. Moderation by +Fons Tuinstra of the China Speakers Bureau.

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Haier is “insanely curious” - Bill Fischer

Haier, China's famous electronics firm who started already to go global in the 1990s, is “insanely curious”, tells IMD professor Bill Fischer in the Business Spectator. Fischer is the co-author of a new book on innovative strategies Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform.

The Business Spectator:

As for Haier, its founder Zhang Ruimin is an avid reader of business literature and a Drucker-quoting member of a management mutual appreciation society that includes Michael Porter and Gary Hamel. IMD professor Bill Fischer, co-author of Reinventing Giants, a new book about Haier, says the company is “insanely curious”. But it is pursuing “revolution by accretion”, with each new development built on the last. Even Haier’s autonomous business units trace their roots back to Japanese quality improvement programs that the Chinese company adopted in the 1980s.

More in the Business Spectator.

Bill Fischer is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

China Weekly Hangout

Can China innovate, was the question the +China Weekly Hangout addressed in October 2012 with political scientist +G. E. Anderson and China consultant at-large +Janet Carmosky. Moderation by +Fons Tuinstra of the China Speakers Bureau.

On July 1 Hong Kong we saw the annual march against Beijing rule. The +China Weekly Hangout will examine on Thursday July 11 (delayed hangout from July 4) the turnout, and how the relationship between Hong Kong and Beijing has developed, since China took over the former British enclave. You can read our announcement here, or join the debate at our event page here.

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