World Monitor Magazine June #3 - Page 125

additional content (such as the number and layout of shelves in the refrigerator), and ancillary design elements (like the pattern of sparkles on a high-end appliance). Factories routinely make them to order. The process is not unlike choosing the accessories on a new car, except that there tend to be more choices. The Internet connection also makes customers more likely to buy a water purifier — which is sold only by consultation. Haier reps are trained to look up the complex data on China’s water problems, which vary by neighborhood, and to install the filters that guard against that neighborhood’s mix of chemicals and pollutants. On its website, which has an active consumer-to-consumer dialogue, the company posts water quality information for 220,000 communities in China. “We want people to be able to find all their water-related answers at Haier,” says Qu Guinan, the general manager of the Haier water treatment company. Building on its success to date, the company is now exploring partnerships with local communities to manage their water purification efforts community-wide. The Internet has enabled the company to expand its service diligence; it provides intensive installation as part of any appliance sale (a rarity in China), and, using monitoring signals from the appliances, it conducts follow-up calls with customers when the equipment is not working. The company also keeps in touch personally just in case the monitoring has missed some cause of dissatisfaction. The connection to customers has helped Haier migrate many people from their medium-value line of household appliances (the original Haier) to the more upscale Casarte brand. The phrase “the information is more valuable than the product” has already become a slogan throughout Haier. “We’re providing information to Chinese households,” says Jiang Hanke, social media director for the water purification platform, “but we’re also benefiting from these interactions. They give us a better understanding of users’ needs. Users can see what the water-quality situation is in their communities and use that information to select filtration products that suit them best. Although we didn’t set up the online resource with the direct goal of making sales, it has had that effect; sales in this still-young business have risen by a factor of four since we’ve introduced the online resource.” Zhang recognizes the high stakes that are involved in changes of such magnitude: “There will be an earthquake [within our company] if it is not properly handled.” But he also believes it is the only course of action that will allow such a large company to succeed in an era when each new triumph leads to new problems. The goal of a large company, he says, is to “lose control step by step.” In other words, Zhang believes that Haier isn’t unique. Every major organization will have to learn how to maintain its identity, the quality of its products and service, and its customer relationships, while being prepared to give up everything else. Haier’s role in this new world will be as a pathfinder: It’s already the first leading global consumer manufacturing company from China. Soon, if Zhang is once again correct, it will be the first company from anywhere with its distinctive, innovative form of management. Author Profiles: • Bill Fischer is a professor of innovation management at IMD in Lausanne, Switzerland. Previously, he was the executive president and dean of the China–Europe International Business School in Shanghai. He is a coauthor of Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform (Jossey-Bass, 2013). • Umberto Lago is an associate professor of management at Bologna University in Italy and a coauthor ofReinventing Giants. • Fang Liu is an investment analyst at Lombard Odier Asset Management, a former research associate at IMD, and a coauthor of Reinventing Giants. Resources 1. Bill Fischer, Umberto Lago, and Fang Liu, Reinventing Giants: How Chinese Global Competitor Haier Has Changed the Way Big Companies Transform (Jossey-Bass, 2013): Comprehensive story of Haier’s management philosophy and influence; this article draws on that book. 2. Jeannie Jinsheng Yi and Shawn Xian Ye, The Haier Way: The Making of a Chinese Business Leader and a Global Brand (Homa & Sekey Books, 2003): First substantive book on the company, with a great deal of detail on its early days and quality ethic. 3. Art Kleiner, “China’s Philosopher-CEO Zhang Ruimin,” strategy+business, Winter 2014: In-depth discussion of management thinking and the company’s identity through change. 4. George Kohlrieser, Susan Goldsworthy, and Duncan Coombe, Care to Dare: Unleashing Astonishing Potential through Secure Base Leadership (Wiley/Warren Bennis Books, 2012): Leaders can take a group through extraordinary turmoil by building trust and inspiring focus. 5. Zhang Ruimin, “Raising Haier,” Harvard Business Review, Feb. 2007: “A leader whose existence is unknown to his subordinates is really the most brilliant one.” based on Strategy & Reference: www.strategyand.pwc.com supported by EUROBAK 119