Zhang Ruimin: Achieving Excellence through Reinvention of Business Model and Corporate Culture at Haier




Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

ABSTRACT

The case discusses the reinvention of the business model and corporate culture of Chinese multinational consumer electronics and home appliances company, the Haier Group (Haier). Zhang Ruimin (Zhang), Chairman and CEO of Haier, was credited for transforming Haier into the world’s largest appliance brand through his ‘radical management innovations’. Zhang was credited with reinventing the company’s business model and corporate culture after taking charge at Haier. In 1984, when Haier’s predecessor, the Qingdao General Refrigerator Factory, was producing substandard products and selling them at a premium due to huge demand, several consumers complained to the company about the poor quality of its products. Realizing that this model was unsustainable in the long run, Zhang focused on enhancing the brand and developing quality products. Zhang’s second reinvention at Haier came in 1991, when he saw that quality alone was not sufficient to woo consumers; they needed to experience great service. Thus he reinvented the business model around providing service responsiveness. This required the workers to change the way they delivered their services to the consumers.

After instilling a culture of service and quality in the company’s manufacturing processes, Zhang’s next step in his course for reinvention was to reach out to the consumers. For this, he focused on the cultural value of putting customers first, or attaining “zero distance from customers”. Zhang thus removed the middle management and created a unique internal talent pool and bidding system, wherein its 80,000 global employees were organized into small independent teams known as ZZJYT (Zi Zhu Jing Ying Ti, meaning ‘independent operation units’)...

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Issues

The case is structured to achieve the following teaching objectives:

  • Appreciate how companies can achieve excellence by reinventing their business model and corporate culture.
  • Appreciate the importance of fostering a culture of innovation and internal competitiveness to compete with big multinational corporations in the international market.
Contents
INTRODUCTION
HAIER IN ITS INITIAL YEARS
ZHANG RUIMIN AND THE SLEDGEHAMMER STORY
FORMING THE HAIER GROUP
FOSTERING A CULTURE OF INTERNAL COMPETITIVENESS AND INNOVATION
REINVENTING HAIER
FOCUSING ON QUALITY
SERVICE RESPONSIVENESS
CUSTOMER ENGAGEMENT THROUGH ZZJYT
THE RESULTS
LOOKING AHEAD
EXHIBITS

Keywords

Haier, Zhang Ruimin, Qingdao General Refrigerator Factory, Liebherr, Business model, Corporate culture, Innovation, ZZJYT (Zi Zhu Jing Ying Ti, Entrepreurship, Strategic Business Unit, Turn around, Six Sigma, Customer engagement, Organizational structure, Teamwork

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