World Monitor Magazine June #3 - Page 120

additional content of Haier as a truly Internet-based company, open to the world in a way that few other companies have attempted, let alone realized. Haier is reinventing itself as a truly Internet-based company. Zhang Ruimin, CEO and chairman of Haier the 30 years of his tenure, his sharp focus on customer service leadership has given the company consistency even as it propels Haier through dramatic changes. Zhang was the leader who proposed that Haier should never see itself as just a manufacturer of products, but instead as a provider of solutions to its customers’ problems. In the earliest years, that meant bringing new levels of quality and reliability to Chinese products. Later, it involved increasingly sophisticated forms of customization and new types of services. Through its simplicity and continuity, this principle has given all employees a reliable compass with which to make decisions, even in the face of disruptive market challenges such as new technologies or new competitors. To accomplish its goal, Haier has consistently cultivated and rewarded high-quality talent; the company has been a magnet for many of China’s most capable engineers and businesspeople. This approach is especially noteworthy within China’s cultural and social context. In a country that was just beginning to emerge from a Maoist mind-set when Zhang took the helm, the idea that success depended on the entrepreneurial efforts of individuals, recognized for 114 world monitor their differences and rewarded for their achievements, was relatively unfamiliar. Haier has thus invested a great deal, especially for a Chinese company, in training its employees and demanding innovative ideas. Despite the success it has achieved, and its willingness to stick to one core value proposition (and one CEO) since the 1980s, the company has never become complacent. Zhang established early on that changes would be a way of life, not soon-to-be-completed episodes that must be traversed. “The only thing that we know is that we know nothing,” he says. “If you don’t overcome yourself, you will be overcome by others.” Indeed, Haier has reinvented itself at least four times. The first reinvention, in the 1980s, was the decision to differentiate the company by the quality of its products. The second, in the 1990s, was the adoption of consumer-responsive innovation, starting with (but not limited to) products for particular customer needs. The third, which took place in the 2000s, was the reorganization into a bottom-up structure, in which self- managing teams led decision making. The fourth, going on today, is the reinvention Zhang did not develop this management approach on his own. From the beginning, he displayed a fervent curiosity about management and high performance, and he studied the work of leading scholars and observers, especially eminent management writer Peter Drucker. He took from Drucker, for example, the idea that the purpose of a business is not making money, in itself, but attracting and meeting the needs of customers. If a customer wins by gaining a better product or service, then everyone else should win as well, including the organization’s shareholders through increased profits, and the employees through increased income. A visit to Qingdao with Zhang and his associates can take the form of a management seminar; visitors are subjected to relentless questioning on management innovations that might be of interest to Haier. Zhang often takes his own notes, and he frequently applies the concepts to Haier — first in small experiments, and then rolled out through the company. Building a Quality Brand Haier, founded in the 1930s, was nearing bankruptcy in the early 1980s, when Zhang brought it back to life. At that time, demand for appliances was slowing down in the West after 35 years of growth. Looking to recoup, Western manufacturers cast covetous