The following passage is an extract from China’s stock market is falling, but its innovators are still rising fast authored by Larry Downes in The Washington Post on 15th July 2015. This article gives comments on the deep exploration into business model by CEO Zhang Ruimin, and holds the view that Zhang Ruimin’s way of thinking is of great importance to global enterprise development. Here are excerpts from the article.
OnePlus’s embrace of the disruptive innovation philosophy is inspiring, but nowhere near so much as that of Zhang Ruimin, CEO of Haier, the world’s largest manufacturer of durable goods including air conditioners and kitchen appliances, with annual sales close to $30 billion.
Zhang, now 66, was a local government official in 1984 when he was assigned to resuscitate a moribund refrigerator factory in Qingdao. When he arrived, he found workers using the factory floor as both bedroom and bathroom, and famously rounded up defective refrigerators he found in inventory and personally smashed them with a sledgehammer.
From that unconventional beginning, Zhang, a management autodidact who counts Peter Drucker among his many influences, oversaw Haier’s remarkable rise, winning numerous awards for product quality along the way.
Now a revered business visionary in China, Zhang refuses to leave well enough alone, and is in the midst of smashing Haier’s business model once again. Recognizing the disruptive potential of such emerging technologies as the Internet of Things, 3D printing, and embedded software that can reconfigure traditional durable goods such as those Haier produces, Zhang recently undertook to restructure the company as a collection of competing start-ups.
Employees have been grouped into small teams, who work on product design in collaboration with real customers, sometimes racking up millions of social network communications in a matter of months. Lower-level employees who believe they have better ideas than the leader can take over the team, and all employees share in the success of new product launches.
In 2014, for example, a 15-person Haier team created and launched the iSee mini, an ultraportable Internet-connected projection system that runs on Android. The device, built in response to requests from mothers on one of Haier’s many online forums for a screenless system that children could use to watch videos, is now moving into mass production based on extensive user testing and iterative design.
Over locally-grown tea, Zhang and I shared our admiration for Nobel Prize-winning economist Ronald Coase, who famously wrote in 1937 that companies only existed to overcome inefficiencies in the market. As information technology rapidly erases those inefficiencies, he agreed, the nature of business enterprises — their size, their role, and their longevity — is now very much in flux.
Zhang believes that despite its success, Haier urgently needs to reinvent itself once more, before someone else does it for them. He sees Haier’s future in the cloud, where the company can become a platform for internal and external collaboration, not only with customers but suppliers and entrepreneurs looking for partners with established brands and capacity. Increasingly, Haier’s products will be supplemented with services, and hardware will migrate to software.
CEOs of stalling U.S. industrial giants, in my experience, rarely express Zhang’s level of creativity, humility, or candor. They prefer to dismiss the Internet as irrelevant to their business, or at best as a frustrating source of unfair competition.
I don’t know what will happen to China’s stock market, or whether the country’s hands-on industrial policy and social engineering can really work in the long-term. But Chinese entrepreneurs, new and old, are at least asking all the right questions.
