This case won the Strategy and General Management category at The Case Centre Awards and Competitions 2023. #CaseAwards2023
Who – the protagonist
Zhang Ruimin, Chairman and CEO of Haier Group, the world’s largest global home appliance company.
What?
This case explores Haier Group’s (Haier) transformation from a domestic refrigerator manufacturer in China to an innovative global platform business that operated in five major areas: white goods transformation, investment and incubation, financial holdings, real estate and cultural industry. It looks at Zhang’s efforts to implement a “Rendanheyi” model, aligning Haier’s employees with their end user through the development of largely autonomous micro-enterprises.
By 2017, there were over 4,000 micro-enterprises on the Haier platform, many of which earned an annual revenue of over $15 million.
Why?
Zhang believed that big companies such as Haier needed to adapt to remain competitive in the digital age, especially as smaller, more agile companies were able to move quickly to take advantage of new technologies and respond to consumer needs.
In 2013, Zhang started to implement a “Rendanheyi” model. He cut out bureaucracy, removing 12,000 middle managers and offering them a choice: become entrepreneurs or leave the company. Haier did experience some internal resistance as the model was entirely new, and growth slowed for some time. Zhang, however, firmly believed that the new model was necessary for the company to adapt to the digital age and began to roll it out across its culturally diverse acquisitions around the world.
Where?
Haier was a global operation, with its home appliances available all over the world. It was headquartered in Qingdao, Shandong province, China.
When?
The case is set in January 2018.
Key quote
“When an egg is broken from the outside, it becomes food for human consumption. But if it is broken from the inside, it witnesses the birth of a new life. Our task is to help every employee incubate and one day break free of their shells.”
Zhang Ruimin, Chairman and CEO, Haier.
What next?
By the end of 2017, Haier had over 70,000 employees and more than 4,000 micro-enterprises on its platform. Zhang attributed Haier’s success to giving employees more autonomy and focussing on an ecosystem beneficial to all rather than purely profit maximisation. He would not, however, be satisfied with the status quo and his new goal was to ensure the platform reached tipping point by September 2018. The issue was, how?
This is the first award win for Rosabeth Kanter and second for co-author Nancy Hua Dai. It is Harvard Business School’s fourth win in the Strategy and General Management category (2011, 2015, 2016, 2023).
Winning the award
Rosabeth said: “It’s particularly meaningful because Harvard Business School has just celebrated the 100th anniversary of the case method. It’s wonderful to follow in the footsteps of countless great case developers and researchers. The award is also a tribute to the excellent work of Nancy Dai, Executive Director of the Harvard Center Shanghai and the HBS Asia-Pacific Research Center.”
Case popularity
Rosabeth explained: “Haier has developed a radically new business model, one that can make participants in case discussions question their own assumptions about how big companies should operate, whether entrepreneurship works in that setting, and whether there are cultural differences in management. These are intriguing topics.
“The case also offers glimpses into the changes in China after the Cultural Revolution and how a leader with a vision of global excellence could transform a small collective factory into a global powerhouse with acquisitions in many countries, including the USA. A followup case on the acquisition of GE Appliances in Louisville, Kentucky, is a proof of concept of the Haier model and how a very different organisational culture can adapt it with great success.”
Writing the case
She commented: “I spent an exciting several days at Haier facilities in China, and Chairman Zhang helped ensure full access. It was important to have good translators, given the language issues.”
Case writing advice
Rosabeth explained: “Tell a good story. Narrative flow matters. Have enough salient facts so that students can imagine themselves inside the situation, even when you can’t possibly know everything.”
Teaching the case
She reflected: “This case has always been popular with my students. When it’s followed by the Haier in the US: Transforming GE Appliances case, with a role play of building ecosystems around products, students are deeply engaged.”
Final word
She concluded: “I thank Nancy Dai for her many talents and contributions.”
Discover how this case works in the classroom.
"The Haier case provides the students with a unique insight into a networked organisation. The organisation of a loosely coupled network of micro enterprises provokes discussion on how this can be transformed to other organisations. In the three years that I have been teaching the case in the course 'Marketing in a Network Economy' at the Faculty of Economy and Business at the KU Leuven in Belgium, the response has always been very positive. Especially with an audience of international students in our MBA programme, where I had the pleasure to integrate the views of some of my Chinese students."
"I use it because few Chinese firms are portrayed as ‘entrepreneurial’ due to their size and country-of-origin reputation and thus, it makes for a good example of how a firm can strategise and be agile despite such a large size. I also like it because it sheds light on how a strategy that works in one market, does not work in others and the challenges of managing people from different cultures."
"The case provides a comprehensive outlook at the company’s transition into entrepreneurial platform.
“In my class, I use it to talk about the organisational structure, it's change and the strategy implementation. The authors describe the history of the company, how it achieved its current strategic positioning, the new opportunities and challenges that arose from global expansion, and how Haier's CEO Zhang Ruimin decided to use the digital age to perform Haier's turnaround.
“The case also pays special emphasis to how the employees of the established organisation may resist change, and shows that leading by example, strong motivation and a consistent approach from the management can help overcome this resistance.
"For all these reasons, this case is a great choice to engage the students in the discussion about strategy implementation, organisation structure and the change management."
"The case presents both a cultural and global perspective of Haier which provided a different perspective to a group of Arab senior managers as part of an EMBA course. The case presents different facets of business growth through the vision of an influential CEO, whose business strategy was anchored on cultural values expressed in Chinese philosophy and executed with an innovative, globalised mindset; the juxtaposition of Eastern and Western ideologies offered a deeper dimension to the teaching and understanding of organisational behavior and leadership. The change process at Haier was dynamic and adaptive, offering a great many learning opportunities about the various contours of change."
The case
Who – the protagonist
Zhang Ruimin, Chairman and CEO of Haier Group, the world’s largest global home appliance company.
What?
This case explores Haier Group’s (Haier) transformation from a domestic refrigerator manufacturer in China to an innovative global platform business that operated in five major areas: white goods transformation, investment and incubation, financial holdings, real estate and cultural industry. It looks at Zhang’s efforts to implement a “Rendanheyi” model, aligning Haier’s employees with their end user through the development of largely autonomous micro-enterprises.
By 2017, there were over 4,000 micro-enterprises on the Haier platform, many of which earned an annual revenue of over $15 million.
Why?
Zhang believed that big companies such as Haier needed to adapt to remain competitive in the digital age, especially as smaller, more agile companies were able to move quickly to take advantage of new technologies and respond to consumer needs.
In 2013, Zhang started to implement a “Rendanheyi” model. He cut out bureaucracy, removing 12,000 middle managers and offering them a choice: become entrepreneurs or leave the company. Haier did experience some internal resistance as the model was entirely new, and growth slowed for some time. Zhang, however, firmly believed that the new model was necessary for the company to adapt to the digital age and began to roll it out across its culturally diverse acquisitions around the world.
Where?
Haier was a global operation, with its home appliances available all over the world. It was headquartered in Qingdao, Shandong province, China.
When?
The case is set in January 2018.
Key quote
“When an egg is broken from the outside, it becomes food for human consumption. But if it is broken from the inside, it witnesses the birth of a new life. Our task is to help every employee incubate and one day break free of their shells.”
Zhang Ruimin, Chairman and CEO, Haier.
What next?
By the end of 2017, Haier had over 70,000 employees and more than 4,000 micro-enterprises on its platform. Zhang attributed Haier’s success to giving employees more autonomy and focussing on an ecosystem beneficial to all rather than purely profit maximisation. He would not, however, be satisfied with the status quo and his new goal was to ensure the platform reached tipping point by September 2018. The issue was, how?
Author perspective
This is the first award win for Rosabeth Kanter and second for co-author Nancy Hua Dai. It is Harvard Business School’s fourth win in the Strategy and General Management category (2011, 2015, 2016, 2023).
Winning the award
Rosabeth said: “It’s particularly meaningful because Harvard Business School has just celebrated the 100th anniversary of the case method. It’s wonderful to follow in the footsteps of countless great case developers and researchers. The award is also a tribute to the excellent work of Nancy Dai, Executive Director of the Harvard Center Shanghai and the HBS Asia-Pacific Research Center.”
Case popularity
Rosabeth explained: “Haier has developed a radically new business model, one that can make participants in case discussions question their own assumptions about how big companies should operate, whether entrepreneurship works in that setting, and whether there are cultural differences in management. These are intriguing topics.
“The case also offers glimpses into the changes in China after the Cultural Revolution and how a leader with a vision of global excellence could transform a small collective factory into a global powerhouse with acquisitions in many countries, including the USA. A followup case on the acquisition of GE Appliances in Louisville, Kentucky, is a proof of concept of the Haier model and how a very different organisational culture can adapt it with great success.”
Writing the case
She commented: “I spent an exciting several days at Haier facilities in China, and Chairman Zhang helped ensure full access. It was important to have good translators, given the language issues.”
Case writing advice
Rosabeth explained: “Tell a good story. Narrative flow matters. Have enough salient facts so that students can imagine themselves inside the situation, even when you can’t possibly know everything.”
Teaching the case
She reflected: “This case has always been popular with my students. When it’s followed by the Haier in the US: Transforming GE Appliances case, with a role play of building ecosystems around products, students are deeply engaged.”
Final word
She concluded: “I thank Nancy Dai for her many talents and contributions.”
Instructor viewpoint
Discover how this case works in the classroom.
"The Haier case provides the students with a unique insight into a networked organisation. The organisation of a loosely coupled network of micro enterprises provokes discussion on how this can be transformed to other organisations. In the three years that I have been teaching the case in the course 'Marketing in a Network Economy' at the Faculty of Economy and Business at the KU Leuven in Belgium, the response has always been very positive. Especially with an audience of international students in our MBA programme, where I had the pleasure to integrate the views of some of my Chinese students."
"I use it because few Chinese firms are portrayed as ‘entrepreneurial’ due to their size and country-of-origin reputation and thus, it makes for a good example of how a firm can strategise and be agile despite such a large size. I also like it because it sheds light on how a strategy that works in one market, does not work in others and the challenges of managing people from different cultures."
"The case provides a comprehensive outlook at the company’s transition into entrepreneurial platform.
“In my class, I use it to talk about the organisational structure, it's change and the strategy implementation. The authors describe the history of the company, how it achieved its current strategic positioning, the new opportunities and challenges that arose from global expansion, and how Haier's CEO Zhang Ruimin decided to use the digital age to perform Haier's turnaround.
“The case also pays special emphasis to how the employees of the established organisation may resist change, and shows that leading by example, strong motivation and a consistent approach from the management can help overcome this resistance.
"For all these reasons, this case is a great choice to engage the students in the discussion about strategy implementation, organisation structure and the change management."
"The case presents both a cultural and global perspective of Haier which provided a different perspective to a group of Arab senior managers as part of an EMBA course. The case presents different facets of business growth through the vision of an influential CEO, whose business strategy was anchored on cultural values expressed in Chinese philosophy and executed with an innovative, globalised mindset; the juxtaposition of Eastern and Western ideologies offered a deeper dimension to the teaching and understanding of organisational behavior and leadership. The change process at Haier was dynamic and adaptive, offering a great many learning opportunities about the various contours of change."
