An exclusive interview with Mr. Zhang Ruimin through the knowledge@Wharton about Haier Rendanheyi model.

An exclusive interview with Mr. Zhang Ruimin through the knowledge@Wharton about Haier Rendanheyi model.

In a recent conversation with Knowledge@Wharton in New York City, Zhang Ruimin, Chairman and CEO of Haier Group, spoke about his early days at Haier, The content of the interview reflects the essence of Haier business management model.

When it talked about the origin of the concept of Rendanheyi. he said,”One lesson I learned from Peter Drucker is that managing, or being a manager, is not about how many people you are managing or how large your team is, but about the results and value that you can create. You can be very highly skilled. You can have very high-ranking positions in the company, but if you do not produce any real results, it is still ineffective.When our company was still small, we were a very energetic team. But as we scaled, we witnessed a lot more problems, such as silos between different departments. They become self-centered instead of working together. We got this so-called ‘big enterprise disease.’ That’s why we thought it was important to change our business model and to develop this new model of management.” 

When it talked about the challenges in the early years when the Rendanheyi model did not succeed. He said,” It took a very long time for this model to succeed because it takes time to change people’s mindsets. Previously, execution was the most important thing in our organization. We had a very strong culture of execution. To change that to an entrepreneurial mindset took time.

Previously, people worked in siloed departments. They didn’t know who their users were and they didn’t know how to engage with them. As they transitioned to the micro-enterprise model, they needed to take time to think about their end-user and how to engage them. This is not a process that can be completed overnight, especially when we let go more than 10,000 middle level managers. We had to start small, with small pilots, and then replicate those pilots after they showed some success. In 2016, over a decade after we first proposed the model, we saw some great changes in performance. But it was not the result of a single effect or a sudden change.

We believed, at that time, that it was important to start working on connected appliances so that we could directly engage with our users rather than relying on traditional distribution channels. We have our own network and we rely on that network to engage directly with the users through connected appliances.”

Original link:"For Haier’s Zhang Ruimin, Success Means Creating the Future"

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