“Individual” refers to an employee while “Goal” is not order in the narrow sense. Rather it refers to user demand. “Individual-Goal Combination” is to let employees and users unite into one entity, while “Win-win” manifests itself in employees realizing own value in the process of creating value for users.
Win-win Model of Individual-Goal Combination fits in with the Internet Age. Its fundamental difference with traditional management model: traditional management model is constituted with the company at the center while Win-win Model of Individual-Goal Combination is user centric. In the Internet Age information asymmetry shifts the balance in favor of the user and users can decide the fate of an enterprise. The only option of the enterprise is catch up with the speed with which the user clicks on the mouse. To be able to do this front-line employees have to be given maximum autonomy and decision-making power, so that they can respond to the demands of users in the fastest way possible. Win-win Model of Individual-Goal Combination is let employees become the principal in independent innovation, thereby forming a new pattern of relationship between the enterprise and employees. In another word, instead of employees following orders from the company as was the case in the past, employees now have to follow the demands of users, and the company in turn has to heed its employees’ plan to innovate on behalf of users.
The essence of the Win-win Model of Individual-Goal Combination: I create my own users and I share in the value I added. In another word, the employee has the autonomy to make decision in light of change in the market and the employee has the right to determine his/her income in line with the value they created for users.
Platform Ecosystem of ZZJYTs in parallel connection under the platform organization
Theoretic basis for traditional corporate strategy and organization structure is the division of labor theory exposited in Wealth of Nations written by Adam Smith in 1776. It laid the foundation for the organizational structures and management theories of corporate management for over 200 years of the industrial society. The impact of the division of labor theory manifests itself in two respects: first manufacturing; and second organization.
Its manifestation in manufacturing is the assembly line. Frederick Winslow Taylor - “Father of scientific management” – put forward the time and motion study which turned small mills into industrialization. The assembly line has up to today been a main tool in raising efficiency by corporations. Its manifestation in organization is hierarchy. Max Weber is acclaimed as “father of organization theory” and his hierarchy is also called bureaucracy which is still used by companies today. The hierarchy organization is like a pyramid with a great number of tiers. Hierarchy organization, however, can no longer answer the questions of today in the Internet Age.
Alfred Chandler, an American business historian, attributed the prime power of modern industrial capitalism to scale and scope. As such, Chinese enterprises are pursuing economies of scale and scope, aiming to grow big and strong. Whilst Haier believes that the prime power in the age of information technology is not scale or scope. Rather it is the platform. So-called platform refers to an ecosystem that gathers resources. It mobilizes various resources in the fastest way possible to meet personalized demands of users in the Internet Age.
It is so because the advent of the Internet Age results in users prevailing over the enterprise. There is always information asymmetry between the enterprise and the user. Traditionally the enterprise had the upper hand in this asymmetry while in the Internet Age the balance tilted in favor of the user. Users may know everything about the enterprise while the enterprise finds it almost impossible to have knowledge about all the users. Consequently the traditional business model is being challenged.
Organization is traditionally a pyramid with employees at the bottom and leaders at the top. People at higher levels give order to those at lower levels and subordinates are supposed to obey their superiors. In the process of promoting the Win-win Model of Individual-Goal Combination Haier flattened the organization into a dynamic network organization.
Haier is exploring ecosystems of platform organization. Platform organization means resources mobilized and dispersed on demand and employees are classified as registered employees and online employees. The employees, who used to wait for directions from the hierarchy and take orders passively, now become interfaces linked to resources. Take the household appliances R&D in Haier for example, the R&D personnel have now become interface persons connected to outside resources. Haier now has over 1,150 R&D interface persons tapping into more than 50,000 R&D resources worldwide. In another word, many are not employees registered at the company, but employees that can be consolidated online. The future of these interface persons is set up micro enterprises as independent enterprising ventures.
Haier Win-win Model of Individual-Goal Combination is an effort of innovation to meet challenges in the Internet Age. It’s both contemporaneous and international. It’s a step in the direction recognized by international authorities.
Cross-border A&M failure rate is rather high. Eighty percent of the failures are due to culture incompatibility. Zhang Ruimin, CEO of Haier Group, believes that cross-culture is of itself a false question that catches only a superficial phenomenon. Once we have grasped the natures of human being and culture the cross-culture issue disappears. Here at Haier people believe in a quote from the German philosopher Immanuel Kant, which says that humans are never treated merely as a means to an end, but always also as ends in themselves. That is to say that at no time should anyone treat themselves or others as a means to an end, for human beings are themselves the ends. As long as we treat others with respect and let them as the ends develop their value, many of the problems can be solved. The Win-win Model of Individual-Goal Combination makes an employee who used to follow orders from leaders to follow the demands of users, so that each one decides their own value in the process of creating value for the users. Its essence is let each one become his/her own master and CEO.
After acquiring Japanese Sanyo White Goods in 2011, Haier introduced the Win-win Model of Individual-Goal Combination which turned the team there from “complete obedience to leaders” to “complete obedience to users”. The seniority-based compensation system deeply rooted in Japanese firms was broken, transforming into one in which whoever creates bigger value for the users can harvest better gain. A 35-year old Japanese employee demonstrated the ability to create better user value and was promoted to the position of manager in an exceptional way, which was unimaginable in a typical Japanese company where seniority is everything. The advancement of the Win-win Model of Individual-Goal Combination therefore brought about a culture of opportunity equality and result equality, which greatly inspired the innovation vitality of the Japanese employees. Haier turned the loss-making business around within the year.
Many renowned management experts and business schools are following and studying the Win-win Model of Individual-Goal Combination of Haier. World-class strategy master and author of The Future of Management said that a few companies worldwide are carrying out similar innovation on management and none of them have succeeded.
The ZZJYT innovation advanced by Haier is ahead of its time and surely will achieve success. The Spanish IESE Business School has incorporated into its teaching case book a case on the cross-culture integration of Individual-Goal Combination. Zhang Ruiming attended the 73rd Annual Meeting of the Academy of Management on invitation and delivered a keynote speech on the Win-win Model of Individual-Goal Combination. Zhang Ruiming was the only entrepreneur invited to give keynote speech at this most authoritative academic meeting in the world.