The Rendanheyi Model of Haier

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Organizational Configurations (Mintzberg) > Forum > The Rendanheyi Model of Haier

The Rendanheyi Model of Haier
Jaap de Jonge, Editor, Netherlands
Haier, the worlds largest appliance maker, has developed a very innovative way of organizing their multinational firm. The corporation has been divided into 4.000 self managing micro enterprises, of which about 250 are market facing ("users"). The others are called "nodes". These are supplying the "users" with components and services such as HR, finance and IT.

The users may hire or fire nodes or outside providers as they see fit. All micro enterprises are ultimately accountable to the company's customers and a highly entrepreneurial culture is cultivated.

The Rendanheyi model has several innovative attributes:
1. OPEN SYSTEM OF MICROENTERPRISES: The enterprise has been transformed from a closed system to an open system, a network of self-governing microenterprises with free-flowing communication among them and mutually creative connections with outside contributors.
2. CUSTOMER-ORIENTED: Purchasers of our offerings are transformed from customers to lifetime users of products and services designed to solve their problems and increase their satisfaction.

3. LEADING TARGETS: A dynamic system in which each microenterprise is charged with pursuing ambitious goals for growth and transformation, not simply based on last year's results.
4. OPEN CONTRACTING: no internal monopolies of supplying departments like legal, IT, HR, etc., but freedom to shop outside if a better solution is available.
5. VOLUNTARY COOPERATION in so called "platforms". Platforms are aimed at serving a business industry (category, i.e. washing, gaming) or at developing a new capability, without top-down coordination.
6 OPEN INNOVATION: R&D has heavy involvement of clients, outside institutions and experts ("solvers"), and crowdsourcing is used for funding and feedback.
7. EMPLOYEE OWNERSHIP: Employees are transformed from executors of top-down directions to self-motivated contributors, in many cases choosing or electing the leaders and members of their teams.
Please add a reaction if you can contribute additional insights about this very interesting organization model.
Zhang Ruimin, "Why Haier Is Reorganizing Itself around the Internet of Things", S + B, Summer 2018, Issue 91
Gary Hamel and Michel Zanini, "The End of Buraucracy - How a Chinese appliance maker is reinventing management for the digital age", HBR Nov-Dec 2018, pp. 50-59

Rendanheyi Model is a Great Concept
Steven Cooke
I am so glad to see that a major company is actually doing this! Too many companies that I have been in try to resemble territorial governments instead of economic enterprises. The best performance always comes from self-motivated and responsible individuals integrated into the enterprise, not "command and control" hierarchies.

A Web of Things is the Way to Go
srinivas, Lecturer, India, Member
In fact using artificial intelligence concepts most of traditional functions can be automated by the occurrence of an event sensed by some sensor. We already have automated functions like payroll. What we really need is an integrating platform which glues together all support functions such as HR, finance etc. With that objective Makarand systems was established, but we need some encouragement in furthering the implementation of the above concept which not only integrates the functions, but also enhances the quality level of experience of the people involved in the delivery mechanism. .

Rendanheyi Model is a Concentric Model by Design
Gregory Johnson, Coach, United States, Premium Member
I love it as it is presented. I am most interested in the dynamics of the "User Interaction" and the "Complements" features of the design. The key components to embrace are the mechanics of Communications throughout the measurement of Impact and the Internal Relationships with the External Relationships.
Communications as the fluid vehicle from those of executive and design positions provides the freedom and limitations on decision-making. Impact of a Relationship model, such as this, is not as much a quantitative focus as much as a qualitative focus. Traditional business has followed the archaic Newtonian features of business that embraces the Frederic Taylor model of mass production without regard to the humanistic assets possible from the people closest to the product and process.
The above Rendanheyi Model is a Concentric Model movement as the ideal design and direction for most businesses operating to value the workforce of today and the future that is seeking inclusion.

Rendanheyi Model is Novel and Exciting
suresh Chintada, Director, India, Member
On first reading the whole model sounds very exciting and appears to enable open innovation culture amongst the micro enterprises.
Not sure how the organisation is glued together though. Who is responsible for sales, who owns pricing of goods, who resolves conflict among the micro enterprises and works for the benefit of overall Haiar? Are the enterprises loosely put together with their own systems and processes? Who owns the brand promise? And how do the goals trickle down (or percolate)?
Got me interested to further dig the model.

Integrating the Applications
srinivas, Lecturer, India, Member
@Suresh We can integrate the applications using an ontology, though conflict resolution and negotiations are possible by software agents but it can happen in due course of time, I suppose... With regards to ownership, the assumptions are that the organisation is a living entity and that management by consciousness has a huge role to play I suppose with regard to bonding and taking the responsibilities adaptively.
I think here the concepts of Madhuvidya can be incorporated for better quality level of experience... What's your opinion?

Challenges to Success for Rendanheyi Model
Armando Aramayo, Business Consultant, Peru, Member
The shown topic is very interesting as a way of managing complexity by distributing actions.
Normally in theses cases what you gain in flexibility can be lost in coordination quality.
So we should ask what would be the best ways to get an adequate coordination among the participating units without a big bureaucracy in between?

Organisation Structuring
Maurice Hogarth, Consultant, United Kingdom, Premium Member
I vaguely remember (I think) that 3M structured themselves along similar lines and a number of organisations have set up departments /product groupings as independent business units and their own profit centres. So what is particularly new/innovative about Haier?

He is Innovative
Carlos Alberto de Sousa, Project Manager, Brazil, Member
@Maurice Hogarth: I think he is innovative. He structuren a business model that no company has, although there may be others that have similarities with the proposed model.

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