Keeping Up with the Times

Haier CEO on His Company’s Innovative Strategy

10/12/2012

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"In its organizational structure, Haier has moved from the pyramid to an inverted triangle. The top managers are at the bottom of the triangle," Zhang Ruimin, CEO of Haider Group, told a Continuous Education program session held on IESE’s Barcelona campus today and moderated by Prof. Carlos Sánchez-Runde.

Introducing the speaker, Dean Jordi Canals said that in 1984 Zhang had taken a small company and turned it into the world’s biggest supplier of domestic electrical appliances in the world and that he had achieved this through innovation and top quality management.

"Companies must adapt to their times," Zhang said. "The vitality of the organization is crucial and complacency is the enemy. Success is an image you project on to a mirror. If you like what you see, it won’t last."

The company developed the idea of self-managed units. An important feature of this teamwork is the change in the model where each employee is a self-managed unit and where remuneration is linked to performance. "If you can’t meet your strategic goals, you will be fired," he said. It is a dynamically optimized system.

He said that the biggest weakness of companies is to see themselves as the center of things when in fact they need to be open to society. "It is a process of continuous self-adjustment," he said. "If you can follow the demands of the end user, you can keep up with the times. The aim of Haider is to satisfy the customized needs of end users while employees create value for end users voluntarily, he said.

The inverted triangle strategy is difficult to implement in real life and to get around these problems the company set up small teams and gave people more autonomy. Instead of one big innovation department, for example, they broke down innovation to team level so they could apply it to individual products.

"Managers at Haier, instead of giving orders, provide support so that employees have what they need to do their jobs," Zhang said.