Haier's practice of Internet transformation has no precedents to draw on. Whether it will be successful or not, it still needs time to test. But what is worthy of recognition is that Haier’s practice is not a one-off, but a gradual transition.
As Zhou Yunjie, the president of Haier Group, said in 2000, Zhang Ruimin published an article "My Opinion on the New Economy" and said to all Haier executives that "there is no death when the net is touched." In 2005, Haier launched a 1000-day process re-engineering; It was not until December 26, 2012 that the implementation of the networked strategic transformation was officially announced.
Zhang Ruimin has been exploring the Internet transformation for 15 years, and his experience is worthy of reference.
On the morning of April 29, Zhang Ruimin, Chairman and CEO of Haier Group, accepted an interview with a reporter from Caijing magazine and responded to the current Internet + concept and the problems and solutions faced by Haier Internet Transformation.
Q: What is Internet+?
Zhang Ruimin: The Internet + enterprise is by no means a simple "oil + water". The oil is very nice, floating above it, but the water and oil are separated. Using Internet technology and means, and zero distance from users, can truly achieve a harmonious relationship. We call this "user revival."
For example, the Haier logistics management team, previously artificially sent live, is now converted to ERP system to send live, this is not the Internet +, this is just an information technology. We need to subvert the entire traditional process, decentralization, de-intermediation, allowing users to directly grab the system, the team and the user directly communicate.
Decentralization means that every employee becomes the market center, and all managers have all the rights in their hands, including decision-making power, human rights, and distribution rights. Traditional enterprises also try to decentralize, but the points are divided and still in the hands of managers. Now the remaining power of managers is just to provide resources. Going in this direction may be able to achieve what Drucker said, 21st century companies should be everyone's own CEO.
De-intermediation is to remove the process that is going to be in the enterprise. Every employee has zero distance from the user.
Internet + is for the enterprise to be reborn. If you spend money on the ERP system, or the traditional mode, it does not solve any problems. Traditional companies cannot get used to old bottles of new wine.
In the past, Haier has experienced many changes, but this time it is totally different. There have been signs in the past, and you can learn from American and Japanese companies, but this time there is no road sign. For those enterprises that have developed with Internet technology, the organizational structure is also partly based on the management experience of traditional enterprises. We cannot compare the platforms that Haier should do with Tencent, Ali and Xiaomi.
After the enterprise has gone from 0 to 1, it must have thought of from 1 to n. After that, the organizational structure of the enterprise will return to the tradition and become its own bondage. After the big bang, it was a big squeeze. After others saw it, they would squeeze with you. If Haier does not want to squeeze, he must explore from the beginning.
Q: How to make organizational changes for the Internet business model?
Zhang Ruimin: My understanding of the Internet is not that enterprises want to become the Internet. Enterprises are just one of the numerous nodes in the Internet. If the business positions itself as an Internet node, then you must be open. Just like there are 100 billion neurons in the human brain, each neuron is stupid, but it is very smart to be together.
There is only one business model in the Internet age: Can you benefit all parties in your ecosystem? In the past, traditional companies only considered maximizing their own interests. Each company was squeezing upstream, then producing products, and then selling it with strong propaganda. All enterprises had no users, only customers.
This is a very closed system, but now, closure is not profitable, you must integrate with all aspects of resources, the center of integration is the user.
In order to adapt to the transformation of business models, companies must make two changes: one is strategy and the other is organizational structure. Our strategy must become a single person, the enterprise becomes a business platform, and the departments and organizations become self-organized.
Now Haier has three types of people, the first is the platform owner, the second is the small micro-master, and the third is the maker. For example, Zhou Yunjie (the president of Haier's rotation) is the big platform owner. The criterion for assessing him now is, is this platform producing more and more small and micro enterprises? If these small and micro enterprises can't grow up, it is his responsibility. Instead of telling people what to do as he used to.
Xiaoweizhu and Maker are actually one and the same, everyone goes to discover the market together. Maker holds shares in Xiaowei, but needs to sign a gambling agreement with Haier. Only when it reaches a certain target value, can you redeem your shares. For example, after a certain value has been obtained by a listed company (Haier has two listed companies - Qingdao Haier and Haier Electric), it can replace the shares of the listed company. When the listed company cashes the shares, there is also a certain unlocking period: the profits of the listed company, The market value has reached certain requirements.
Most small and micro companies, Haier only occupy a small share, do not have to combine financial statements, its performance will not affect the performance of listed companies. However, listed companies have priority repurchase rights. For example, when Xiaowei Company reaches the break-even point, my listed company has the right to repurchase.
This organizational restructuring transforms the personal imagination space with the innovation value of the enterprise.
Q: How to embody the importance of technology in the transformation of the Internet?
Zhang Ruimin: Internet + enterprises do not pay attention to the ability to transform technology, but through such organizational structure adjustment, all small and micro companies must have excellent technology.
In the past, Haier organized new product development every spring and autumn. How to get it, how to get it, it is complicated, but now I don't care. I ask you from a shareholder's point of view, rather than asking for it like a manager to help you do it.
The world is my research and development department, you can integrate global resources, if you can't integrate it, then this little micro will not do it.
No one said that technology is not important, but how is this technology coming? I can't rely on the insiders to say the finale. In the past, many companies have a high level of technology. For example, Sony, the whole world is learning him, and we are also there to be like a pilgrimage. But why can't Sony do it? There is also Kodak, Kodak fell, Taiwan's digital technology sold 1.9 billion US dollars. Is there any technology? Yes.
Technology in the Internet age must interact with users.
Haier has five R&D centers around the world. The current position is the connection center of global resources. User feedback will be directly transmitted to the R&D center. Previously, the R&D center only undertook research and development, and each department paid for it according to the research and development results. After paying for it, it would not matter. This method does not meet the iteration requirements of the Internet. If you are good, you have to iterate.
Therefore, for the strategic transformation of a traditional enterprise, the adjustment of strategy and organizational structure is more fundamental than technology.
Q: How to avoid the internal friction in the transition?
Zhang Ruimin: Some people have questioned that turning a company into a self-organizing platform will generate a lot of internal friction and does not conform to the Coase Theorem. The Coase Theorem says that companies have boundaries. The enterprise boundary is simply the transaction cost. If your transaction cost is higher than others, you can't expand. But the premise of the Coase Theorem is that there is no market within the company. Because every time there is a relationship between the internals, a friction occurs, so it can't become an internal market, and the transaction cost is high.
But Coase sees the business as isolated, not open. The reason why there is friction inside is because: First, there are leaders to give you instructions; second, many resources come from within. If there is no unified leadership and resources come from the market, then the friction is equal to zero.
In the past, there were tens of thousands of people in Haier who assessed the KPIs of each department. Not only has the KPI assessment been cancelled, but these people have also been canceled.
For example, logistics delivery, in the past, relying on people to call, user satisfaction is not satisfied, and now rely on users, Haier regulations: delivery according to the contract, timeout exemption. The original departments have mutually restricted each other, and now they have become synergistic. If they do not cooperate, they will have to be fined.
For example, Haier has thousands of upstream suppliers. In the past, there was a very strict external company review process. Reporting, reviewing, going to the site to see, how to send the documents, the law also needs to check whether it is a kickback. It seems that this process is very it is good. However, so many manufacturers, it is inevitable to make fake rent-seeking, so the daily disputes continue.
Now that it’s all in one, the process is gone. I don't have spare parts, I want modules. You go online directly. If you do well, the share given to you will be large. The supplier is very happy and the cost goes on. At the same time, after docking with the market, after the refrigerator is sold, a certain component is broken and directly fed back to the supplier for processing. In this way, the supplier must do the following: First, participate in the front-end design, and second, you and my users should be connected.
Therefore, to eliminate internal market friction, we must do the following: First, all of your people, can you be centered on the user, the user is your leader; second, can all departments get from the market?
Q: Will the self-organizing platform get out of control?
Zhang Ruimin: We were also very worried at the beginning. Is this completely open and independent self-organizing small and micro, will it get out of control?
This actually depends on whether these entrepreneurial teams can control themselves? In fact, if you don't do this, can you control it? Which big company does not have policies and countermeasures? Then the big companies have issued more policies according to the countermeasures, and more and more fine, you control everything, but the creativity of people is gone. You are out of a big business. This big business is ill, and when you finally want to cure, you can't cure it.
My duties and tasks are how to become a designer and how to dismantle the original aircraft carrier into a fleet.
Q: How to deal with performance pressure?
Zhang Ruimin: The former CEO of IBM once told me that my approach sounds good, but they can't do it. Because he has to be responsible for Wall Street every year, if Wall Street requires a profit of 10 billion, they have to distribute profits to various departments. If they are all separated, what should I do? This makes sense.
The biggest threat to Haier’s network transformation is now. Haier also has two listed companies, and it is also possible that this profit indicator will not be reached. It is very likely and very difficult to control. The current profit growth is good, but the revenue is quite different.
It’s hard to turn every startup team into a self-organized immediate result. Everyone becomes a master, and the owner values ​​the profit. In the past, how much was the increase in sales. Now it is going to make a profit, so he has to get rid of a lot of unprofitable and go forward. Therefore, there will be a temporary decrease in revenue. But this phenomenon cannot last too long.
Business transformation is like changing the engine in the air. We are flying in the air, we have to change the engine now, it is difficult to lose 4 engines in one airplane. Then our current practice is to change one, change one, change one, and change one. The challenge is that you can't land hard and fall off when you lick it. You can slow down, but you can't reduce the speed at which you can't fly. At this time, you have to grab the time to change the engine.
The difficulty of traditional enterprises is that I can't go to the end. No matter what the Internet company can do, it doesn't matter if it can lose five years. We have to eat, what should we do? Therefore, it is necessary to turn those seemingly burdensome physical resources into quality assets.
Traditional companies have many resources, marketing networks, logistics and service networks. The integration of industrial Internet with the physical network, if it is to be separated, means that we have given up the original advantages. Now we turn the offline store into a store that interacts with the user. Users constantly interact on top of each other, so offline stores are not a burden. What we want to do is to really get through O2O. Users can participate in the design of the product, participate in the marketing of the company, and become part of the ecosystem.
The subversion of the Silicon Valley model is the scene business. I can let the user see that the demand is being met.
Q: How to deal with management and cultural challenges?
Zhang Ruimin: The biggest challenge in the transformation of the Internet + enterprise is management, because many people's ideas are difficult to turn around. Of course, go deeper and say that the reason for not being able to turn around is related to personal interests. The relationship between business and employees has created a job for you in the past. Now it is gone, only creating a few opportunities for entrepreneurship.
Even the United States is not a Silicon Valley culture. Haier’s US headquarters company is in New York. When we first reformed, we wanted to become a one-man. In the past, how much money was given for each position. Now, how much is the value that is created for the company. After they heard it, 12 people immediately resigned.
Cultural integration has cost a lot of effort, and the most difficult is Japan. Japanese culture is very different from ours. The salary of employees is good. Teamwork is good, but the disadvantages brought by teamwork are not able to exert individual creativity.
Kant’s sentence: People are not tools. If you use him as a tool, then you can't do it.
From the direction and mode of transformation, we must follow this path. It’s just that their habits are different and they don’t necessarily take the approach of our side. In Japan, take a drink in the pub and gradually implement it through drinking. If you don't drink alcohol, you can't implement it.
It is very difficult for a big company to become a maker culture, because the traditional organizational structure will kill you.
The transformation of the Internet + enterprise means that the enterprise is open, so that you will see many failures. If you don't change or change, you may not see failure now, but the whole enterprise will fail, just like Kodak.
From the corporate culture, it is to embrace the failures in the transformation. As far as I am concerned, I have to find ways to control failures in a relatively low range.
No company can succeed without tossing it, or it is not yet when it should be tossed. I have noticed that after many companies have achieved a success, they feel that they are omnipotent. Haier has also developed rapidly, and now we want to throw the original one.
I wake up every morning and tell myself that I am actually a stupid person.
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