About Haier

From Ford to Haier, "Being-towards-Death" of the Corporate Paradigm


The term "paradigm" was first proposed by Thomas Kuhn, the founder of the American historicism in the philosophy of science. The basic meaning of the term is: "Some recognized paradigms in the actual science activities - including paradigms of laws, theories, applications, and equipment, provide models for the traditional scientific research in some subject".

It can be argued that the enterprise management paradigm focuses on the whole workflow elements of the enterprise. Not only the production methods, it also explores various issues such as organization, management, and employee value. It was proposed in an article "Organization Management Theory of 'China Times'" that the three companies of Ford, Toyota and Haier represented the three revolutions of the enterprise management paradigm. In fact, compared to other companies of the same generation, the common feature of Ford, Toyota and Haier is to explore a complete and effective enterprise whole workflow system, and rely on this unique model to pursue excellence in their respective eras.

To see through the brief history of the term "enterprise", it has been full of profit, plunder, and control of such radical attributes since the start of the handicraft industry in the 16th century.  Human society is constantly moving toward civilization. The collapse of the feudal system and the acceleration of the primitive accumulation of capitalism have also contributed to the transformation of the corporate form. Especially at the advent of the industrial revolution accompanied by the roar of steam engines, the popularity of large machines not only liberated human productivity, but also liberated our thinking about the factory enterprise system.

Although the plunder of the feudal society has ceased to exist, with the establishment of the factory system in the 1930s, large-scale centralized labor and regulation became the commonality of future enterprises. The "violence" under this kind of civilization has established a corporate empire. Although there are many reformers in the process of enterprise development, most of them still stay on the issue of solving production efficiency. The top-down control was not changed. The obedient execution was also not changed.

Haier management model

Haier System, a Paradigm Disruption —— "Being-towards-Death"

Toyota System has made Japan's corporate management paradigm go to the world stage, but this does not mean it is impeccable. The core point in Ruth Benedict's The Chrysanthemum and the Sword is that Japanese have special contradictory personality because they are eager to be recognized and achieve self-realization while they will walk the chalks and are willing to be controlled. This kind of contradiction is also reflected in Toyota's System whose essential appeal is to make employees better serve the company, although it tried to stimulate employees' autonomy.

The humanity research of Toyota's System is positive, but not profound enough. Because it doesn't change the essence of Ford's bureaucracy and its perception of the market is still based on enterprises as the core. Therefore, we have seen many high-welfare companies decline steadily in the internet era such as Kodak, Nokia, Yahoo, and Microsoft. In my opinion, this is because such companies ignore another attribute of "humanity" — user value.

At this level, Haier's exploration of the business management paradigm shows its unique advantages. Firstly, it needs to be clear that in Haier's entrepreneurship, the state of "suiciding for rebirth" is always existing. So I prefer to define the exploration of Haier System as a process of "Being-towards-Death". The death doesn't mean demise, but refers to the overall subversion to get rebirth.

User value is the core of Haier System. And in this dimension, Haier defines the market demand for the new era as "user experience plus personalized customization", and lays out models such as Connected Factory, COSMOPlat and so on. So that the transformation from mass manufacturing to mass customization can be achieved. The mass customization relies on the high efficiency under high precision and emphasizes that users are supposed to be involved in the whole process of manufacturing and consuming. Its goal is to have all manufactured products ordered, and until now its non-inventory rate has reached 69%. As a matter of fact, the manufacturing model in Haier System has answered the question of "whom we are intelligently manufacturing for" and completely overturned the traditional habit of traditional enterprises to pursue for production capacity.

In terms of management, Haier's Rendanheyi Model has opened an era when everyone becomes an entrepreneur, which is the new understanding of Haier System on employee value. Comparing with "enterprise identification" of Ford System, Haier requires its employees to "identify themselves", and then to realize self-entrepreneur. In addition, Haier also make entrepreneurs paid by users instead by enterprises, so that those who create more user value get more benefits, otherwise, they will be eliminated. Therefore, employees in Haier System are autonomous because they are not controlled by the enterprise, but interact directly with the market. They are self-organized, self-driven and self-evolving.

The subversion of production, management and human value has also completely changed Haier's organization. Haier broke the shackle of bureaucracy, and has changed into an infinite platform organization, meanwhile it attracts the world's first-class resources, producing co-creating and win-win ecosystem. In fact, the organization of Haier bears the most meaning of "Being-towards-Death", because it is trying to end the form of enterprises and reborn as an "urban ecosystem". Its pursuit is not a century-old enterprise, but endless growth.

Of course, Haier System which achieves comprehensive subversion will not be the end of corporate management paradigm. Because it is also a product of the times just as Ford System and Toyota's System. However, Haier, "Being-towards-Death", enlightens us that subversion is not exclusive to western enterprises including Ford, Toyota, Jack Welch's GE, and Kazuo Inamori's Kyocera. Instead, it can come from the oriental, from China in the IoT era.

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