CASE STUDY
From bureaucratic to organic
GE Appliances transforms from a faded bureaucracy into a dynamic innovator
The iconic American white goods manufacturer became a household name in the 1950s. By the 1980s, it was facing stiff competition from more nimble global players.
GE had been looking for a buyer for their appliances division since a false start in 2008 was shelved due to the financial crisis. It wasn't until 2016 that Haier Group of China bought the US-based white goods manufacturer from GE for $5.4bn in cash.
Haier was already well known for its steadfast commitment to reinventing the complex bureaucracies that result from modern management principles and practices. Its philosophy of Rendanheyi, where the customer is the focus of every employee and entrepreneurialism is the order of the day, posed what many thought of as an impossible challenge to this traditional organisation; how would they make it work?
The Challenge
With half a century of calcified process, policy and procedure, no one in GE believed that a lumbering bureaucracy famous for its sclerotic layers of middle management could become an agile, entrepreneurial innovator driving growth in North America.
How they did it
Agree on needs and expectations and find common ground
From the outset, Haier was clear that they expected and supported the exponential growth of GE Appliances (GEA) business. Haier's CEO, Zhang Ruimin, and Kevin Nolan, who later became GEA’s CEO, agreed that survival would mean changing how the company worked. Together they set a goal of becoming number one in North America, starkly contrasting with the previously held "playing not to lose".
Invite the change with mature, respectful human relationships
Haier's leadership believed that people closest to the customer know best what works locally. Their management philosophy of Rendanheyi was not forced on GEA; instead, Haier focused on educating GEA on the new model and how it could support their shared goals. It took a while, but the real change began when the penny dropped for GEA leadership and they realised that they were no longer the omnipotent decision makers and arbiters of truth and were to become the stewards of human potential.
Guiding beliefs and philosophy
As CEO Zhang Ruimin says: "With the RenDanHeYi model, we truly enter the network age. But the network aspect is not even the most important. What is more important is that we no longer try to delegate to or 'empower' employees. It's now time for every employee to be his or her own boss. Even Peter Drucker told us that 'everyone can be a CEO'. And if everyone acts as a CEO, we will grow collectively as an enterprise and no longer be dependent on a few key people. So, with the RenDanHeYi model, we move away from being like an empire (with a traditional, closed pyramid) to being more like a rain forest (with an open networked platform). Every empire will eventually collapse. A rainforest, on the other hand, can be sustained." Literally, "Ren" refers to each employee, "Dan" refers to the needs of each user, and "HeYi" refers to the connection between each employee and the needs of each user.”
The Results
After the first year of learning about Rendanheyi, GEA started evolving one enormous bureaucracy into several microenterprises. It has been the fastest-growing appliance company in North America every year since.
If you like this mini case on GE Appliances you can hear the CEO Kevin Nolan discussing the transformation in depth with Gary Hamel and Michele Zanini.
IN BRIEF
IN MORE DETAIL
After the first year of learning about Rendanheyi, GEA started evolving one enormous bureaucracy into several microenterprises. It has been the fastest-growing appliance company in North America every year since.
|
|
|
|
Copyright © Beliminal LLP All rights reserved. See our Privacy Policy, Terms of Use and Terms and Conditions for full details.
Haier was already well known for its steadfast commitment to reinventing the complex bureaucracies that result from modern management principles and practices.