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A Reinvention Success Story

During the last year, the COVID-19 pandemic gave rise to the need to reinvent the ways in which we do business and, in many cases, the very nature of our products and services. In the months ahead, we’ll hear many stories of how businesses and nonprofits reinvented themselves to continue being relevant and successful during these challenging times. The screen printer that began printing and selling masks to keep its employees working. The community kitchen that served more hungry people than previously, pivoting to a takeout format. Small businesses with no online purchasing or curbside delivery capabilities making that leap.

The story of the successful reinvention of the Haier Group, in Qingdao, China, is not related to COVID-19 but has much to teach about quality, entrepreneurship, and innovation. I recommend you add it to your reading list.

The Haier Model: Reinventing a Multinational Giant in the New Network Era by Cao Yanfeng documents the success of the Haier Group. In the 1920s it was an indebted factory supplying refrigerators to the Chinese market. Since 1984 under the leadership of its CEO, Zhang Ruimin, it has transformed itself into what is now the world’s leading manufacturer of household appliances, with annual revenues of an estimated $30 billion.

Zhang’s business model is a unique blend of Western and Chinese philosophies. He places an emphasis on creating a culture that empowers employees, allowing them to self-manage and be entrepreneurial. Zhang admired Peter F. Drucker’s management thinking and wisdom, and Drucker’s definition of business purpose, creating a customer, was a guiding principle as Haier identified customer needs and created customer value.

Haier uses the RenDanHeYi Model. ‘Ren’ in Chinese refers to employees with the spirit of entrepreneurship and innovation. ‘Dan’ in Chinese refers to high quality and customer value. “HeYi” in Chinese refers to the integration of entrepreneurs’ value realization and customer value creation. This is a model of servant leadership, with employees serving customers. Haier fosters a culture of individual innovation as the bedrock of its success, and teams of entrepreneurs work together effectively and productively to serve its customers.

If you enjoy reading business success stories, this could be a good choice for you. If you read it, please leave me a comment telling me what you learned.

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