In 1984, Haier was established as a manufacturer of small refrigerators in China. Since then, Haier has grown into a global company with impressive achievements, including filing more than 75,000 patents, receiving 755 international design awards, and holding the No. 1 position in Euromonitor’s Global Major Appliances Brand Rankings for 16 consecutive years.
The secret behind Haier’s success is its RenDanHeYi management model, developed by its founder, Zhang Ruimin. RenDanHeYi means the atmosphere of co-evolution. The guiding principles of the model are as follows:
Principle #1:Human Creative Freedom
At Haier, it isbelieved that everyone has unlimited potential, and it is management’s job to
provide opportunities to unleash that potential. Haier allows its employees to realize their own potential by letting them run their own shows. Haier’s employees are organized into independent and self-directed micro-enterprises. Each micro-enterprise consists of approximately 10 to 15 members. There are more than 4,000 micro-enterprises within Haier’s ecosystem. These micro-enterprises may choose to collaborate or compete. Each micro-enterprise makes its own decisions, including setting goals, selecting strategies, hiring, setting up pay structures, firing, and distributing profits. Some members may invest their own money in their micro-enterprises in exchange for a bigger cut
of the profits. Members can switch to different micro-enterprises whenever they want. Those who have been let go from one micro-enterprise are returned to the central talent pool to receive counseling and training. Most of the time, they are placed into other micro-enterprises. In case a micro-enterprise goes out of business, it will be disbanded, and its members will find placements in other micro-enterprises.
Principle #2: Zero Distance to Customers
At Haier, customers are the real bosses. Zhang Ruimin told his team members that they must know their customers better than they know themselves. Haier’s members are expected to be constantly in direct contact with their own customers via telephone, the Internet, meetings at manufacturing facilities, or home visits, and to collect a large amount of customer experience data to understand why customers are using Haier’s products, how they are using Haier’s products, and
what kind of experience they have with Haier’s products. In addition, their contact must be lifelong, not transactional like in many other businesses.
Principle #3: Mutual Value Creation
At Haier, team members strive to create value for all stakeholders.
· Customers at Haier are viewed as co-creators of Haier’s products. When customers provide feedback to Haier’s team members, the team then creates better products for the customers.
· Micro-enterprises that serve the same group of customers might form a group called “Ecosystem Micro-Communities” to jointly create value for their shared customers, in exchange for splitting profits among the members of the Ecosystem Micro-Communities.
· Haier maintains anetwork of solvers, or outside experts, who give advice to Haier’s micro-enterprises. These solvers are rewarded with shares of the profits. Some of these solvers eventually become leaders of new micro-enterprises.
· At Haier Community Stores, where Haier provides after-school childcare, anyone in the ommunities that Haier serves can come to the stores and pitch ideas to the company. If selected, the owners of promising ideas can start new micro-enterprises at Haier.
Principle #4: Water Philosophy
Water is benevolent and flows freely without boundaries. This means that Haier’s ecosystem can expand endlessly to help others. The ecosystem does not need to remain in one industry. Under this principle, Haier’s ecosystem has expanded into other industries, including agriculture, biotechnology, clothing, finance, food, healthcare, real estate, and sporting technology.
RenDanHeYi hasbeen studied widely around the world because it has been proven to enable small companies to compete successfully with larger companies and to grow exponentially within a short time frame.

Bibliography:
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