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Global Business Model Shift

A Comprehensive Guide to RenDanHeYi (RDHY) Implementation

Author: Umberto Lago

Publisher: Springer Nature Switzerland

Book Series : Future of Business and Finance

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

Table of Contents

About this book

This book takes the readers on a profound exploration of global business transformation through the lens of the RenDanHeYi (RDHY) business model. It discusses the complexities of implementing RDHY beyond China and navigating cultural, regulatory, and organizational intricacies. It helps uncover the pragmatic and outcome-oriented nature of RDHY, with a focus on aligning core values for sustainable success. Using a multidimensional analysis, the author reveals hidden layers of values, philosophies, and principles that underpin successful business models. For leaders and managers navigating the challenges of genuine transformation, this resource offers a comprehensive roadmap, transcending surface-level changes to foster authentic and enduring success in the dynamic landscape of global business innovation.

Frontmatter

1. Introduction

Abstract

This chapter serves as an introductory chapter to the book, presenting the general framework of the work and its basic concept: adopting a business model cannot merely involve mimicking its organizational structures and processes. Instead, adopting a business model requires embracing its purpose and values before undertaking any other steps.

The chapter outlines the book’s methodology, which is based on several in-depth interviews with managers both at Haier in China and at the companies adopting RenDanHeYi (RDHY)—namely Haier Europe, GE Appliances, Gummy Industries, MAQE, and Fajar Benua Group. These interviews provided valuable insights into the practical challenges and successes encountered during the implementation of RDHY, forming the foundation of the book’s analysis and recommendations.

The chapter outlines the structure of the book, which is arranged into three parts:

The five steps of RDHY implementation

RDHY user manual

Case studies of firms adopting RDHY

By combining theoretical insights with practical guidance and real-world examples, the book aims to provide readers with the knowledge and tools needed to successfully adopt and benefit from the RDHY business model.

Umberto Lago

13. Some Final Thoughts

Abstract

As I reach the conclusion of this work, I feel compelled to share a few additional thoughts. The first one, which has been on my mind since the beginning of this journey, concerns our approach to interpreting and applying the concepts found in management literature. Exploring Peter Drucker’s “The Practice of Management,” I was genuinely surprised by how many of the core principles of RDHY, which seem so innovative in their application by Haier, were already articulated 70 years ago. This discovery led me to consider how we absorb and interpret these ideas. Why is it that we have seemingly overlooked Drucker’s concepts for so long? Is it because of the massive volume of information we encounter every day (even though one wonders if it was similar 70 years ago), which might have reduced our receptivity to new insights? As a result, when we read management books, we might find them intriguing, but often stop short of seriously considering their application in our day-to-day professional lives. We might pick up a few tips or make minor adjustments, but we tend to avoid fully embracing the bold changes that these books, especially Drucker’s, advocate for. We appear hesitant to venture too far from established norms and comfort zones and, as a result, we continue with the same old habits. Perhaps organizational inertia plays also a role in resisting change.

Umberto Lago

The Five Steps of RenDanHeYi Implementation

Frontmatter

2. Step 1: What Is RenDanHeYi?

Abstract

The purpose of this chapter is to illustrate the functioning of this fascinating business model as it has been conceived and implemented at Haier in China. The chapter delves into the fundamental tenets of the business model, which include zero distance with users, trust and development of employees, and the sharing of value among users, employees, and the company.

The chapter also explores the evolution of the model and its latest developments. Additionally, it presents two case studies that demonstrate the implementation of the model, showing how two micro-enterprises have evolved into standalone companies of significant importance within the Haier Group: Internet of Food and COSMOplat.

By examining these cases, readers will gain a comprehensive understanding of how Haier’s business model promotes innovation, empowers employees, and creates value for all stakeholders.

Umberto Lago

3. Step 2: The Role of Purpose in Organizations and in Business Models

Abstract

Moving from the brilliant statements of Peter Drucker, who asserted that the purpose of a company should be “to create a customer” and that the maximization of profit “does harm” to the business, this chapter discusses the purpose of a business in general before delving into the purpose within the RDHY model. Given Zhang Ruimin’s admiration for Peter Drucker’s work, it is not surprising that the purpose of the RDHY model aligns closely with Drucker’s ideas.

The chapter then proceeds to analyze how companies that are willing to implement this business model articulate its purpose within their unique business and geographical contexts. By examining various implementations, the chapter provides insights into the adaptability and effectiveness of the RDHY model across different settings, illustrating its potential to drive innovation and sustainable growth globally.

Through detailed examples and practical applications, readers will understand how the principles of the RDHY model can be tailored to diverse business environments, irrespective of companies’ size, industry, and location.

Umberto Lago

4. Step 3: Values and Beliefs (Corporate Culture) as the Foundation of Organizations

Abstract

The main tenet of this book is that it is not possible to implement a business plan if the values and beliefs—that is, the corporate culture—on which it is based are not shared. Consequently, this chapter starts by investigating the values and beliefs that inspire RDHY and how these values have been nurtured and disseminated across the Haier Group.

A second part of the chapter focuses on companies that are in the process of implementing RDHY. Sharing the values that inspire this business model cannot be done dogmatically; companies need to recognize their own values and beliefs and start from there to evaluate the cultural changes necessary to successfully embrace RDHY. This process involves a deep reflection on the existing corporate culture, identifying areas that align with RDHY principles, and making thoughtful adjustments to integrate new practices and mindsets.

Moreover, the chapter emphasizes that adopting RDHY requires a customized approach, taking into account the unique characteristics of each company. Through practical examples, it demonstrates how different organizations have successfully aligned their corporate cultures with the RDHY model, leading to enhanced employee engagement, customer satisfaction, and overall business performance.

Umberto Lago

5. Step 4: Empowering and Incentivizing People

Abstract

Incentivizing people in corporations to improve performance has always been a significant challenge and a crucial area of business research and consulting. More recently, the empowerment of people has gained traction as managers and scholars have increasingly understood the liabilities of bureaucratic, hierarchical organizations. This chapter reviews some of the key theories and practices that have shaped contemporary management and that helped shaping RDHY’s approach.

It then moves to analyze how incentives and control work at Haier, highlighting the tools and mechanisms effectively used to achieve these results. The chapter explores Haier’s unique approach to motivating employees, emphasizing trust, autonomy, and the alignment of individual and organizational goals.

Following this, the chapter examines what companies implementing RDHY are doing to replicate Haier’s success. It discusses how these companies adapt the principles of RDHY to their specific contexts, considering different settings, rules, habits, and cultures.

By illustrating various implementations, the chapter provides insights into the flexibility and scalability of the RDHY model. It provides valuable lessons for businesses seeking to motivate and empower their employees, ultimately driving sustainable success and competitive advantage.

Umberto Lago

6. Step 5: Crafting Human-Centric Organizational Structures

Abstract

Exactly 70 years ago, Peter Drucker called for an appreciation of employees as key resources rather than cogs in the industrial machine. He provided insights for the decentralization of companies, the empowerment of employees, and a focus on results over processes. This chapter reviews these principles, which are at the heart of RDHY, to illustrate how Haier has brought them to life. Principles are only theoretical until someone has the courage to make them real, and I believe that Peter Drucker would be very satisfied and proud if he could see what Haier has achieved by treasuring his suggestions.

The chapter then analyzes how other companies implementing RDHY are adapting these same principles, translating them into their unique business environments. This section highlights the necessity of customizing organizational structures to align with the existing culture and operational framework of each company. It emphasizes that while the foundational principles of RDHY are universal, their application must be carefully tailored to fit the specific circumstances and challenges faced by different organizations.

Moreover, the chapter discusses the importance of a gradual and mindful approach when crafting new organizational structures. Companies must recognize their current state and carefully implement the transformation process, acknowledging that each path to implementation is unique. Through detailed case studies and practical examples, the chapter provides insights into the diverse ways organizations have successfully integrated RDHY principles, promoting a culture of empowerment and decentralization.

Umberto Lago

RDHY User Manual

Frontmatter

7. The RDHY User Manual

Abstract

This chapter introduces a manual—a step-by-step guide inspired by a Haier washing machine manual—for the “installation,” utilization, and maintenance of the RenDanHeYi business model. The manual is highly practical, breaking down the process of model introduction and utilization into actionable steps. These steps are categorized into three main sections, based on what we have learned in the previous chapters: Purpose and Culture, People, and Organization.

In line with the washing machine manual, this manual features a Cautions paragraph, a Blueprint for RenDanHeYi installation, a Before Use section, and Functions and Maintenance sections. A Troubleshooting paragraph completes the Manual.

By following this comprehensive manual, companies can introduce and maintain the RenDanHeYi business model, leveraging the insights and principles discussed in previous chapters.

Umberto Lago

Part III

Frontmatter

8. Haier Europe: The Challenge of Implementing RDHY in a Multinational Environment

Abstract

Even though it is a subsidiary of Haier, the implementation of RDHY in Haier Europe is far from straightforward. Haier Europe is a complex mix of regional companies, languages, norms, habits, and cultures. Implementing a business model developed in China in such a heterogeneous environment is not a task for the faint-hearted. This chapter explains how Haier Europe has carefully introduced RDHY in such a delicate environment, translating Haier’s values into an understandable language.

The chapter also details how Haier Europe has redefined its organizational architecture to embrace the micro-enterprises structure of its parent company.

Furthermore, the chapter addresses the challenge of transforming employees into entrepreneurs in a European context, where employees traditionally are not accustomed to taking on entrepreneurial responsibilities and place a high value on their leisure and family time.

Haier Europe also integrated this entrepreneurial attitude into its incentive structures, aligning rewards with the principles of RDHY. This meant designing incentive systems that recognize and reward innovation, accountability, and performance, while also respecting employees’ need for work-life balance.

Umberto Lago

9. GE Appliances: The Turnaround of a US Icon

Abstract

This chapter narrates the remarkable turnaround of GE Appliances, an iconic American company. Purchased in 2016 by Haier after years of stagnant sales and a culture centered on internal efficiency and short-term profitability, the company underwent a significant transformation following its acquisition. In 2019, GE Appliances began implementing the RDHY model, and by 2022, it had become the second-largest brand in terms of units sold in the major appliances market in the USA.

The chapter focuses particularly on the introduction of a new, radically different culture into a traditional, hierarchical enterprise. Initially, GE Appliances faced significant challenges in shifting from its established norms to the innovative, employee-centric principles of RDHY. This required a fundamental rethinking of its organizational structure and management practices.

The chapter highlights the challenges and successes of this cultural transformation, illustrating how GE Appliances managed to overcome initial resistance and build a thriving, innovative organization. It also provides insights into the strategies used to integrate RDHY principles into an American business context, demonstrating the adaptability and effectiveness of the model across different cultural landscapes.

Umberto Lago

10. Gummy Industries: RenDanHeYi in Italian Sauce

Abstract

Can a business model developed by a Chinese home appliance giant be beneficial for a small Italian advertising and marketing agency? The answer is, surprisingly, yes. Indeed, the RDHY business model seems as suitable for professional and service practices as it is for industrial companies. This chapter details how Gummy Industries, an Italian advertising and marketing agency, has creatively adapted the business model to their own reality. The Micro-enterprise became the kitchen, its CEO the cook, and the team the kitchen brigade. This culinary metaphor resonated well with employees from the creative world, who were not as familiar with traditional business concepts. By framing the business model in familiar terms, Gummy Industries made the principles of RDHY more accessible and applicable to their team.

While Gummy Industries took the liberty to tweak elements as needed to fit their specific context, they preserved the core values and the true spirit of RDHY. The creative adjustment of definitions, processes, and structures while maintaining adherence to the core principles of the model is key for their successful implementation of the model.

Umberto Lago

11. MAQE: Lessons for RDHY Adopters

Abstract

What happens when you want to adopt a business model that you admire, but you start by importing only a part of it? This chapter tells the story of MAQE, a Thai software company specializing in digital commerce, and their implementation of the RDHY model. Initially, their adoption of the model started on the wrong foot. However, quickly recognizing this misstep was crucial for making the necessary corrections and reorienting the implementation process.

There are valuable lessons to be learned from mistakes, sometimes more than from successes. In this case, MAQE learned the importance of having a clear purpose to drive meaningful change. Change, in and of itself, holds little meaning without a goal to guide the transformation process. Understanding this principle was pivotal for MAQE, enabling them to align their efforts with the core values of RDHY and ensuring that every aspect of the implementation was purpose-driven.

Umberto Lago

12. Fajar Benua Group: Implementing RDHY in Indonesia

Abstract

This chapter tells the story of Fajar Benua, an Indonesian group that provides innovative engineering solutions. The group already shared some of the core values of RenDanHeYi and, at the urging of its Chief Strategy Officer, decided to implement a new approach inspired by Haier’s experience.

The case illustrates the introduction of the business model through pilot projects, aimed at testing the viability of the model before a comprehensive adoption. These pilot projects served as experimental platforms, allowing Fajar Benua to identify potential challenges, refine processes, and demonstrate the benefits of the new model on a smaller scale. This methodical approach helped in mitigating risks and building confidence among stakeholders.

The chapter also emphasizes that simply aligning values is insufficient to drive change. It necessitates strong advocates for change who can overcome organizational inertia and break the status quo. The Chief Strategy Officer played a crucial role in this regard, acting as a catalyst for transformation and rallying support from different levels of the organization.

Umberto Lago

14. Correction to: The RDHY User Manual

Umberto Lago

Backmatter

Title: Global Business Model Shift
Author: Umberto Lago
Publisher: Springer Nature Switzerland
Electronic ISBN: 978-3-031-64857-1
Print ISBN: 978-3-031-64856-4
DOI: https://doi.org/10.1007/978-3-031-64857-1