Zhang Ruimin: Achieving Excellence through Reinvention of Business Model and Corporate Culture at Haier

Zhang Ruimin: Achieving Excellence through Reinvention of Business Model and Corporate Culture at Haier
Case Code: BSTR477
Case Length: 13 Pages
Period: 2012-2014
Pub Date: 2015
Teaching Note: Not Available		 Price: Rs.300
Organization: Haier Group
Industry: Consumer Appliances
Countries: China and Global
Themes: Business model reinvention, Corporate Culture, Innovation, Customer Engagement
Zhang Ruimin: Achieving Excellence through Reinvention of Business Model and Corporate Culture at Haier
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case discusses the reinvention of the business model and corporate culture of Chinese multinational consumer electronics and home appliances company, the Haier Group (Haier). Zhang Ruimin (Zhang), Chairman and CEO of Haier, was credited for transforming Haier into the world's largest appliance brand through his 'radical management innovations'. Zhang was credited with reinventing the company's business model and corporate culture after taking charge at Haier. In 1984, when Haier's predecessor, the Qingdao General Refrigerator Factory, was producing substandard products and selling them at a premium due to huge demand, several consumers complained to the company about the poor quality of its products. Realizing that this model was unsustainable in the long run, Zhang focused on enhancing the brand and developing quality products. Zhang's second reinvention at Haier came in 1991, when he saw that quality alone was not sufficient to woo consumers; they needed to experience great service. Thus he reinvented the business model around providing service responsiveness. This required the workers to change the way they delivered their services to the consumers. After instilling a culture of service and quality in the company's manufacturing processes, Zhang's next step in his course for reinvention was to reach out to the consumers. For this, he focused on the cultural value of putting customers first, or attaining "zero distance from customers". Zhang thus removed the middle management and created a unique internal talent pool and bidding system, wherein its 80,000 global employees were organized into small independent teams known as ZZJYT (Zi Zhu Jing Ying Ti, meaning 'independent operation units'). The ZZJYT teams worked in close association with the consumers in a bid to get new product ideas. And after finding a viable idea, the employees worked on developing the product. Employees were rewarded for coming up with new products that satisfied the needs of the customers. According to Haier, the ZZJYT system was designed to foster innovation and internal entrepreurship and competitiveness so that employees performed efficiently and came out with innovative products, and to transform Haier into an efficient and a nimble company.

Issues

The case is structured to achieve the following teaching objectives:

  • Appreciate how companies can achieve excellence by reinventing their business model and corporate culture
  • Appreciate the importance of fostering a culture of innovation and internal competitiveness to compete with big multinational corporations in the international market

Contents

Keywords

Haier, Zhang Ruimin, Qingdao General Refrigerator Factory, Liebherr, Business model, Corporate culture, Innovation, ZZJYT (Zi Zhu Jing Ying Ti, Entrepreurship, Strategic Business Unit, Turn around, Six Sigma, Customer engagement, Organizational structure, Teamwork

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