In the summer of 2023, I took on a research & writing project commissioned by the Haier Model Institute.
The remit: examine the Chinese appliance manufacturer Haier’s ecosystems, develop a framework that explains them, write a whitepaper on it, and present it at its annual RenDanHeYi Forum.
It is because of RenDanHeYi – Haier’s way of managing – that it has become so well-known in the world of management, and why it was an honor to take my second trip to Qingdao, China, to work with the company.
The RenDanHeYi Management Model
RenDanHeYi the brainchild of Chairman Emeritus Zhang Ruimin, has enabled Haier to constantly evolve over the past forty years to become a world-class company, including many famous brands it acquired, such as GE Appliances in the US, Candy in Italy, Fisher & Paykel in New Zealand, and AQUA in Japan.
I spent a week in Qingdao visiting with executives from many different business units, understanding how they were deploying ecosystems across the company to enable it to constantly innovate new offerings.
I remember walking to dinner that Thursday night with my host, Joshua (Jinfan He), talking about what I had learned so far when the framework that described Haier’s ecosystems popped into my head.
(As so often happens; after all, my purpose in business is to figure out what is going on in the world of business and then develop frameworks that first describe what is happening, and then prescribe what companies should do about it.)
Integrated Ecosystems – The Predicate of Haier’s Success
Haier’s success was predicated on focusing not just on its back-end ecosystems (from the company back to its suppliers) but on front-end ecosystems as well, stretching from the company out toward its customers – and, most importantly, including its customers.
The simple 2×2 that resulted from this insight yields four different types of ecosystems: rudimentary, solution, experience, and integrated ecosystems.
Haier excels at the latter, integrating both its front- and back-end ecosystems into the very fabric of the company.
This enables it to discover and develop innovations across the spectrum of its consortium of ecosystem partners, again most importantly including its customers.
This integration effectively vitalizes the company and enables it to thrive (a term I learned from Kim Korn).
When I got back home, I wrote up a whitepaper that Haier shared internally and will soon publish externally, and in the meantime I shortened it for Duke Corporate Education’s Dialogue journal, which was just published in its March 2024 issue as well as online as “Vitalizing Ecosystems”.
When I presented it in a 20-minute speech at the RenDanHeYi Forum, I was separately told by four executives of its subsidiaries that each finally understood what the parent Haier has been trying to tell them about ecosystems for the past few years.
So I encourage you to read it to prescribe how you, too, can embrace the front-end along with the back-end to create one integrated ecosystem that vitalizes innovation.
