The RenDanHeYi Italian style. From creativity to venture incubation at Gummy Industries

Abstract

May a complete RenDanHeyi transformation happen in a matter of months? Against all odds, Fabrizio Martire and Alessandro Mininno, co-CEOs of the Italian communication agency Gummy Industries, showed us how to unleash organizational magic by transforming a digital firm with 60 employees into an incubator of new ventures, with employees co-creating and leading them through flat and autonomous teams, shared services to support scale and a unit already incorporated into a new entity. All of it in a funny, tongue-in-cheek, Italian style!

To know more about the RenDanHeYi, consider joining the upcoming free webinar, Will the RenDanHeYi work for me?, an honest conversation regarding the hurdles, uncertainties, and fears connected to the adoption of this disruptive management model in real organizations on June 30th at 2 PM CEST and booking your seat for the upcoming 3EO / RenDanHeYi Masterclass.

Freedom and responsibility for an entrepreneurial transformation

Gummy Industries is a medium-sized, ten-year-old digital communication agency based in Brescia, near Milano (Italy), offering web design, branding, advertising, and influencer marketing services to Italian and international enterprises. In addition to serving clients, the company puts lots of attention on its employees regarding work-life balance, quality of internal and external relationships, and their opportunities for creative self-expression through daily work and results. The gummy in the company’s name and logo is meant to recall fun, curiosity, discovery, and the interest to connect and interact, typical of this smart, vibrant and dynamic agency.

Their decennial trajectory speaks not only of excellent financial results but also of a continuous attempt to nurture freedom, responsibility, and a stream of new ideas with value both for clients and colleagues. Testimony is an unlimited vacation policy, full-remote work, complete trust in colleagues even before the pandemics kicked in, and the belief that quality outcomes don’t necessarily require long hours in the office. The exploration of new organizational models, such as the RenDanHeYi, is a natural consequence of the company’s values and DNA, with COVID19 and the doubling of the company size just as accelerators.

In Gummy Industries, growth and success came with several drawbacks restraining the firm from realizing its full potential. Among them:

• A visible distance of new colleagues from customer needs and expectations
• Even the management team and company strategy detached from market trends and demands
• A mounting reduction of the flexibility and speed toward change
• The necessity to go through multiple approval levels, even for daily activities, in a reasonably small firm (Gummy Industries currently has 60 employees)
• The search for a continuous, collaborative, and distributed approach to reinvent the company’s services at the pace of online behaviors and social platforms.
• Too much centralization of decision-making power in the hands of the two founders

After ten years of existence and two years into the pandemics, the company had awakened to social, economic, and technological needs and market dynamics it wasn’t any longer equipped to keep up with. On the other side, the transition towards more up-to-date ways of functioning could leverage a small set of principles the company always catered to:

• Minimizing rules and leaving employees as much freedom as possible
• Breaking down person-to-person but also team-to-team barriers to support information sharing and collaboration
• A “better done than perfect” attitude with a predisposition for speed over control
• An invitation to constant and honest feedback
• The belief that an excess of tranquillity and stillness would threaten Gummy Industries’s success.
• Eventually, targeting a company that thrives without a central role for its founders.

Chefs, kitchens, and food markets

Looking for inspiration, Gummy Industries attended one of Boundaryless’ masterclasses, exposing it to the entrepreneurial, ecosystemic, bureaucracy-free ideas of the RenDanHeYi. With a bit of surprise on our side, in less than six months, that initial spark turned into fire with a total upending of the agency’s organizational model through the adoption of most of the constructs pioneered by Hayer’s, even if dressed in a typical Italian flavor (pun intended).

Talking about an entrepreneurial and participative design, the two co-founders and CEOs wisely decided to transparently open up the transformation journey by inviting all of their colleagues to an off-site near Turin and honestly sharing their hopes, fears, expectations, and initial hypotheses for a Gummy Industries 2.0. As you can tell, Italian passion and the love for food had a role in it:

• Kitchens. Individuals with a business and people responsibility would have been invited to become entrepreneurs, with the possibility to pick a small multidisciplinary team named kitchen and autonomously decide its focus. Both easily understandable and appealing, a kitchen is a perfect example of a high-performing and cohesive team specializing in a particular discipline (e.g., Chinese food) with multiple levels of sophistication (Michelin star restaurants). Each kitchen manages its Profit & Loss and can choose both the professionals and skills it necessitates. The kitchen, comparable to Haier’s Micro-Enterprises, receives the mandate to constantly seek new opportunities and directly contribute to reinventing the company’s services. In Gummy Industries, trust in individuals and the company’s willingness to invest in their entrepreneurial development have been the main driver for the unbundling of the firm. Such a new direction was anything but trivial since quite nobody in the company had previous entrepreneurial experience and only a few had managed a team before. Nonetheless, service specialization quickly emerged during kitchens’ formation. Some of them offer digital strategy help, others focus on brand design, media planning, or content production. Each kitchen is largely unique in terms of the capabilities and dynamics it hosts. Industrial sectors (e.g., fashion vs. telcos) acted as a secondary area of specialization for those kitchens that were initially too close in terms of services. Kitchen to kitchen completion doesn’t seem a relevant preoccupation given the broad spectrum the company covers.
• Chefs and Brigades. The six newly created units are led by six chefs, representing and orchestrating the work in them, as with RenDanHeYi’s Micro-Enterprise owners. Colleagues offering their services by being part of a kitchen started to be known as a “brigade.”
• Infusing a structure into the team. Unlike Haier, Kitchens demonstrates a recurring structure of roles that the Chef and the brigade have to fill. Each kitchen is primarily flat, with the Chef taking responsibility for the Profit & Loss and 1 or 2 project managers operationally coordinating activities. The Chef also acts, in a delivery role, as one of the brigade’s members. Interestingly, everybody in the team has the possibility to interact with the client without having the Chef as a filter.
• Priority to innovation, not money. The new system has been optimized for creativity, ideas, experimentation, and learning more than profit maximization. Kitchens have the right to make mistakes, even to lose clients or see projects fail, as long as it could be a chance for improvement, refinement, and long-term growth.
• Profit sharing. From the very beginning, kitchens may retain 20% of the profits they generate and independently decide whether to distribute it (to the sole chefs or among the entire brigade) or if to use it for investments and other expenses. The other 80% pays for everybody’s salary, including the Farmer Market services and the kitchens’ investments.
• Kitchen to kitchen collaboration. Clients may rightly desire a combination of services offered by multiple kitchens. One of the teams may involve people from another, and some support may also be identified in external partners. This area of collaboration typical of Haiers’ Ecosystem Micro-Communities doesn’t seem to be already fully captured in Gummy Industries to foster such orchestration of capabilities and ultimately produce a more sophisticated and value-adding experience for the market, bonuses have been devised for those kitchens that work together and succeed together, as a way to incentivize collaboration more than the competition.
• The Farmer Market. Not all the responsibilities have been transitioned and distributed to the kitchens. By design, customer-facing units will require a set of internal support services such as Legal, Communication, Administration, and HR that should be consistent and able to generate economies of scale. To maintain coherence, kitchens also need strategic direction (Strategy), a common approach to reach the market (Branding and Marketing), support with closing deals (Business Development and Go-to-Market), investments, and financial controls. That’s the purpose of the Farmer Market, a combination of both Haier’s Shared Services Platforms and Industry Platforms. This area has been the subject of many reflections and diverse points of view in the firm. The amount of centralization may thus quickly evolve while feedback from kitchens and the market is collected in the coming months. Sales are an example of responsibilities that could be gradually distributed to kitchens (especially for the more technical aspects of each proposal) closer to the market. Marketing may follow the same path once the recognizability of restaurants reaches a tipping point with a distinctive brand. More than control, Farmer Market’s goal is to offload customer-facing teams from tasks that would defocus and delay them. A final but not meaningless role the Farmer Market has is coaching Chefs in their transition from workers to owners regarding notions and mindset.
• Preventing disasters. In small enterprises, faith in the entrepreneurial drive of human beings, openness to distribute power, and the training of wanna-be entrepreneurs still cannot entirely prevent the risks of a kitchen from severely damaging the entire system. For this reason, the market is also responsible for handling critical situations such as the closure of a kitchen that creates a substantial financial loss without extremely promising perspectives in the long term. A similar condition already took place in the first six months, with the safety net kicking it to protect both employees and the firm by timely closing one of the kitchens. Furthermore, through an internal market, the colleagues whose kitchen no longer existed were invited to join another unit within a week.
• A gradual journey of openness. While to remain within a boundary of safety, the first year of operations has been already estimated and budgeted, imposing guidance on the goals and limits of kitchens and chefs, freedom is expected to significantly increase starting from 2023. Due to business continuity reasons and the required step-by-step learning, Chefs, and thus Micro-Enterprise owners, have been initially selected by the two CEOs with their kitchens associated with specific service bundles (e.g., influencer marketing) and customers (e.g., ten pharma companies). Kitchens also received a target to meet in the first year and an invitation to prioritize internal instead of external hires. The process will soon be opened both to self-candidate and broader freedom regarding target segments / industrial sectors / preferred services in the future. Other colleagues will thus be invited to pitch their proposals (e.g., metaverse or blockchain-related capabilities in the fashion industry) to the founders and more freely manage budgets similarly to Micro-enterprises signing a VAM with Haier’s Industry Platforms. Even the percentage of profit sharing left in kitchens may quickly increase to 50% in 1-2 years. This is also the time expected for former employees to embrace their new careers as entrepreneurs and co-investors fully.
• Restaurants as a maturation path. Not too different from the approach to micro-enterprise incubation proposed by Haier, Gummy Industries consider kitchens only as the first step in the ideation, validation, and incorporation journey for new ventures. Through consolidated offerings, repeated sales, and favorable market feedback, small teams have the chance to formally become owners in newly incorporated companies or restaurants in Gummy Industries’ lingo. Flatmates, a 10-people team co-owned by the Italian communication agency, some former employees, and external partners, is the testimony of such a growth path that all other kitchens will hopefully follow. Gummy Industries is not interested in gaining a majority share in the newly incorporated entities due to its central goal of nurturing its people’s professional and emotional development by letting them feel in control of their ventures.

What Gummy Industries can teach us about RenDanHeYi transformations

We had more than one reason to reconsider our certainties regarding RenDanHeYi transformations after hearing Fabrizio and Alessandro sharing how they had tailored to Gummy Industries the guidelines created by Haier.

• One year is enough. Micro-enterprises, prototypical Ecosystem Micro-Communities, Industry and Shared services Platforms, and even the incorporation of the first new entities have all been designed and prototyped in less than six months to be launched and validated within the first year. That’s nothing compared to both the complexity and times required by Haier’s journey and the path of many other large enterprises. Together with MAQE, this confirms how quickly a mature RenDanHeYi implementation may happen in smaller environments when the right conditions are met.
• From work to incubation at scale. Even more substantially, Gummy Industries commenced a business model transition, from doing work to acting as the venture builder, incubating others to do work, which more and more firms are attempting. Thanks to their success and experience, the two founders decided to give back to their community of younger colleagues by nurturing their possibility to follow the same path quicker, safer, and more effective. To the best of our knowledge, the RenDanHeYi is the best-suited model to support this specific evolution.
• Faith in human potential. The great returns that could be generated by giving “ordinary employees” the power and responsibility so far allowed only to business owners are the first lessons learned by Fabrizio and Alessandro. Seeing copywriters, digital strategists, marketers, and social media experts go from professionals to entrepreneurs able to decide and direct themselves and their teams in 6 months is an incomparable value for them and the firm. For this to materialize, a lead back management approach and high amounts of faith in the potential of each and every colleague have to be infused into the system.
• It must start from the top. In Gummy Industries, it all started and progressed so smoothly because of the willingness of the founders to intentionally step back and proactively distribute their power to the rest of the organization. Not just courage but also a natural sensitivity to the challenges emerging in the market, the needs manifested by employees internally, and awareness about new organizational models are unfortunately still rare in founders, leaders, and owners. Much remains to do to make similar enabling traits a common management starting point.
• Employees stepping forward. At the same time, selected colleagues accepted to jump ahead, taking over some of that responsibility, risk, and fun by rising to the position of leaders and owners, more than workers or even bosses. Both parties must embrace the risk by seeing in it the best guarantee for a thriving future.
• The message is the model. Encapsulating the complexity of the RenDanHeYi into a cool, simplified, Italian storytelling with friendly, easy-to-understand graphics helped the founders intrigue, onboard, and energize their colleagues into a profound and potentially uncomfortable transformation. Since organizational design hardly succeeds at warming business people’s hearts, creativity must be used to attract, build bridges and make the experimentation more attractive.

Initial returns to positively look at the future

Are there already tangible paybacks from all this work after only six months? The answer is a clear and promising yes, at least at two levels:

• From a financial perspective, by June, the revenues generated by kitchens and restaurants had already offset the entire costs for the fiscal year, months ahead of what happened in the past. The advantage accumulated will get reinvested in further perfecting the model design and the freedom allowed to entrepreneurial teams.
• Still, the company feels monetary returns to be the wrong KPI for the transition. More interestingly to them, the introduction of kitchens helped Gummy Industries and its founders to switch to an outside-in relationship with the market by having Chefs and brigades swiftly identify and develop the new services that clients desire at a specific point in time. As a result, seven new offerings have emerged in 1 year instead of the seven years it would have taken through a traditionally sequential approach. New consulting services for the metaverse are an example of a distributed, forward-looking take to anticipating premium offerings that will soon generate traction. Each new service could attract additional corporate clients, drive hundreds of thousands of revenues and increase the credibility and desirability of the brand.

Thanks to this, significant growth rates are projected for the end of the year, and we, at Boundaryless, are committed to checking again soon with Gummy to keep learning from their experience.

Are you into future-proof organization design concepts, techniques, and tools?

Join us at the upcoming 3EO / RenDanHeYi Live Masterclass in September:

https://boundaryless.io/event/webinar-the-rendanheyi-in-practice-voices-from-the-world/

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