Earlier this past week, Thinkers50, a London-based international organization whose mission has been to identify, highlight and rank contributions to management thought for over a quarter of a century, has presented a rare lifetime achievement award to Mr. Zhang Ruimin, President Emeritus of Haier, for four decades of efforts to resist bureaucracy and promote the maximization of human value within large, complex, modern organizations. This recognition of Mr. Zhang’s achievements is not casual recognition. It places him in a very select group of previous winners, consisting of: Charles Handy, Philip Kotler, Rosabeth Moss Kanter, Tom Peters, Henry Mintzberg, Ikujiro Nonaka and Richard D’Aveni. all of which have profoundly affected the way we view our corporate landscape and the behavior of the organizations that inhabit it.
What makes Mr. Zhang special in this group is that not only has he pioneered a new way of thinking about how a large, complex organization might work, but he has actually piloted a forty year journey of transformation who has put the theory, which he called Rendanheyi, into practice, and in the process has turned an old-economy, mature organization into a global market leader, well-prepared for a high-tech, fully connected future. It is this combination of visionary thinking about the nature of the company and the experience of navigating its implementation that makes Mr. Zhang’s story worth noting.
Essentially, organizations are tools for achieving corporate goals. They are built, one hopes, in response to external and non-market forces (political, technological, environmental, etc.), with an eye to meeting the needs and wants of their customer base, in a changing competitive scene. In reality, however, most organizations are legacy pyramid schemes, inherited from the boss you just replaced, fueled by inertia, and traditionally committed to the investor community as their primary shareholder. Zhang Ruimin, as a young government official, entered such a situation in 1984 when he became the CEO of the nearly bankrupt Qingdao Refrigerator Company and also inherited a disillusioned group of workers. His challenge was not only to inspire a much higher degree of work engagement among his employees, but also to redesign an organization so that it had a chance of survival in the domestic Chinese market, following the flow from the introduction of market forces and the recent emergence global, big name, foreign competitors. His response was to embark on a journey of change to completely transform both the organization and the work performed within it, all in service of customer needs and enabled by maximizing the human value he brought to his work. and he succeeded.
What Zhang saw, which so many leaders miss, is that every now and then opportunities arise that open up the possibility of changing everything, not just organizational structure or hiring new people as part of acquiring desired skills, but everything: because the work matters, how our idea of the worker needs to change and what this all means for creating new workplaces and markets. This constellation of job-worker-job switching options has been articulated by Abhijit Bhaduri, General Manager of Global Learning and Development at Microsoft, in a book titled Dreamers and Unicorns. Zhang Ruimin believed that in order for Haier to survive, the entire nature of work in the organization had to change: from acting solely as order takers from above, to being built around achieving zero distance with its customers and users, to a trying to quickly internalize and satisfy emerging customer needs. which in turn meant that Haier could no longer rely on workers acting like bureaucrats, but needed entrepreneurs who would be quick and opportunistic in their pursuit of customer satisfaction. All these, called for a completely changed workplace at Haier. Today, a patchwork of micro-businesses, close to the end user, and in the form of start-up groups, have emerged, autonomously, to replace their predecessors, silos, departments, which were often alienated from the end customer and which did business in ways that too often they were mechanical and indifferent. Key personnel assignments, hiring and firing, and reward and compensation decisions are now made by these small, independent work units, rather than determined by personnel offices. as are strategic choices. Core business partnerships take place, autonomously, within an internal market governed by the value to be created and shared by the partnering micro-enterprises.
Zhang Ruimin’s achievement was to reformulate the entire job-worker-workplace design at Haier. different from the past, but also profoundly different from its market competitors. This is change on a scale and scope that few other known leaders have ever attempted. Henry Ford, with the introduction of the assembly line for efficient production, combined with changing value propositions and product design, along with hiring and compensating workers capable of this new system exemplifies historical precedent. as was the Toyota Production System, compiled by Kiichiro Toyoda (1894-1952)who made a similar transformation, in the same industry, twenty-five years later. Thomas Edison’s “Factory of Invention”.was close to a complete transformation, with an invention within the schedule of the work rate, the reliance on experimentation to succeed, the formation of teams of highly talented “mysterians” to complete a project, regular evening work meetings. and removing walls within the workspace to reduce conversational distance. Edison was an early proponent of organizational ecosystems, engaging and supporting the creation of small, independent businesses to make light bulbs more easily adoptable. but all this was done on a relatively smaller scale than Ford or Toyota. Steve Jobs also approached, by prioritizing the design function within Apple, the adopting a star-like organizational design;, and forming ecosystems to provide content for Apple products, but it never had to make all the choices necessary for a full transformation. Ray Kroc, of McDonald’s fame, changed the way service organizations think about the nature of work and how to create value, albeit one that involves de-skilling workers and introducing ubiquitous automation into the production process .
Most notable are the admittedly great leaders who never even attempted change on this scale: not Jack Welch, who for all his management initiatives, mostly left GE an organization more like the one he inherited in first place? not Jeff Bezos or other legendary “revolutionaries” of Silicon Valley. Howard Schultz made some efforts, particularly around redesigning front-line barista positions so they could be seen and valued for their expertise, but everything else about working at Starbucks remained pretty much the same as its rivals. As a result, most organizations look and function much the same as their competitors, and as a result, significant opportunities for new business models and new competitive advantages are missed.
Today, with the introduction of artificial intelligence, the need to reassess what work really is and how it will change our workers and workplaces is once again emerging as a pressing leadership issue. Will it no longer be considered useful to pursue a competitive advantage by having a distinctive way of working and human engagement? Will artificial intelligence overtake human involvement in work, simply because the idea that taking on such a reinvention of the entire work-worker-workspace dynamic is far beyond what most CEOs are willing or able to undertake? The magic of Zhang Ruimin’s story is that he not only rose to such a challenge, but managed to achieve global market success as a result of his innovative organizational innovation. It is this achievement that earned him the Thinkers50 award he just received.
———————————————————————————————————————————————————————— Disclaimers: I have been a friend and a fan of Zhang Ruimin for nearly three decades and have written a book on Haier’s transformation, Reinventing Giants, and served as a consultant to Haier for the past three years. I have also been a great fan and friend of Abhijit Bhaduri’s work and have co-authored several articles with him. His next book, Careers 3.0 inspired me to use Abhijit’s work-worker-workplace framework to assess the scale and scope of Mr Zhang’s achievements. I am a member of the Thinkers50 Hall of Fame