Haier is a Chinese multinational consumer electronics and home appliances company and in 2011 the Haier brand had the world’s largest market share in white goods, with 7.8%.
WHY IS IT AN INTERESTING CASE STUDY ?
The company’s CEO Zhang Ruimin has been transforming the organisation in the past 30 years in five major stages. The current stage, Networking Strategy, is highly interesting as it aims to leverage Internet technology and decentralise the organisation to become a networked enterprise. According to their website this stage is expressed in three key aspects: “border-free enterprise, manager-free management and scale-free supply chain.” To achieve this goal Haier has a developed a highly unique organisational structure based on principles from interfirm theory to make the organisation hyper customer centric.
Internally this strategic approach is know as the ZEUS model. The underlying logic for the model is that strategic decisions should be driven to the lowest level possible and teams/individuals should be rewarding according to their performance, which is expressed through four key values: Zero-distance to customer, Entrepreneurial employee (self-driven, Self-managed, self-innovation), Unified commitment & process to customer and results and Sharing value with customer and employee. In addition, Zhang has combined Western management thinking and Eastern ideas to develop unique management techniques in the pursuit of becoming a market-centric company driven by win-win company-and-individual-goals.
- Zhang thinks of Haier as a service company and service is best achieved if there is zero distance between Haier and its customers, which requires a more market-centric organisational structure.
- The entrepreneurial energies from the workforce are seen as the best means of achieving the service goals of the company. Hence, value creation should be linked between customers, the organisation, and the employees.
- Presets. Preestablished conversations and agreements (presets) are used as a mechanism for creating responsiveness in the collaboration between the different business units.
- OEC. OEC stands for Overall, Everyone, Everything, and Everyday and Control and Clear and aims to create transparency and overall control of associates finished activities.
- Bilateral recruiting process. Bilateral recruiting process is intended to bring out the entrepreneurial sides of the employees and ensure that talent flows to where it will create most value for both customers and employees.
- Catfish. A catfish (or a substitute team lead) is used to introduce competition in teams and ensure that team leads are motivated to produce excellent results while having a team that supports him/her.
- Autonomous Business Unit System. Haier has developed a particular type of customer teams that self-organise, these are known as ZZJYTs and must act as independent businesses coordinated by presets. The ZZJYTs are bound through a shared brands, strategic goals and organising principles. There are three tiers of ZZJYTs; those directly facing the market, those supporting the first-tier ZZJYTs and those setting corporate strategies and direction. All associates can propose to start a ZZJYTs by submitting a proposal to an internal committee. On the contrary to many agile teams ZZJYTs must have at least 10 associates, while the maximum number of associates is flexible.