The RenDanHeYi drives breakthrough business innovation at Haier Europe

Abstract

On the 8th Jan 2019, Candy S.p.A became a wholly-owned subsidiary of Haier Group. After three years of integration and experimentation, this interview with Carmine Infante, Consumable, Accessories, Extended Warranty, and all Services Business Unit Director at Haier Europe provides a glimpse into how the RenDanHeYi is influencing this new part of the group in terms of culture, organizational model, results, and expectations for the future.

With him, we explored the birth and development of two new Micro-Enterprises, together with dozens of insights for helping other firms in the European market to introduce unprecedented levels of human ingenuity, entrepreneurship, and customer-centricity.

Listen to our recorded conversation and read the post below to know more.

https://www.youtube.com/watch?v=jc_D9N7qPyg

Listen to the recording

The RenDanHeYi comes to Europe

On the 8th Jan 2019, Candy S.p.A became a wholly-owned subsidiary of Haier Group, as the operations platform for the European market and the headquarter of Haier Europe, with an aggregated market share of 15.1% on major appliances, 22.7% on freestanding refrigeration, and 19.8% in home laundry appliances (according to Euromonitor data) ranking 5th in Western Europe and with an aim to enter the top 3 by 2022. Candy’s management team, employees, regional infrastructure, network, and manufacturing were incorporated into Haier Group through the acquisition.

The decision fitted well into Haier’s strategy to attain a leading position in white good appliances in all regions and market segments, with a goal of tapping into Candy, Hoover, and Rosières as well as the other acquisitions of GE Appliances and Fisher& Paykel, to become top-of-mind for global consumers in IoT for smart home appliances.

After 3 years of integration and experimentation, this interview with Carmine Infante, Consumable, Accessories, Extended Warranty, and all Services Business Unit Director at Haier Europe provides a glimpse into how the RenDanHeYi is influencing this new part of Haier in terms of culture, organizational model, results, and expectations for the future.

Carmine has over 20 years of experience with American and multinational companies in multiple sectors, with ten of them spent on white-good appliances. After having the commercial responsibility for different markets, he was recently appointed as Director in charge of developing streams of business connected to new areas and revenue models for Haier Europe. With him, we were eager to explore how Haier’s RenDanHeyi is being introduced and tailored to the needs, attitudes, and contexts of diverse European countries, commencing from the two micro-enterprises Carmine is leading.

Micro-Enterprises as the cornerstone for reinvention

Haier China, Candy, and Hoover historically demonstrated diverging values, behaviors, processes, and ideas about how to run the business. Micro-Enterprises have been the first attempt at filling such a gap at two levels: market-facing and corporate / internally facing ones. Micro-Enterprise located in a specific country is an example of the first kind, while providing services from the European center to local organizations represents the corporate side.

In Europe, the Micro-Enterprise-based transformation specifically started with the most strategic and profitable businesses. While typical of large, complex organizations, such an approach may still leave on the table less mature ventures whose immediate revenues are not large enough but with the potential of paving the way to entirely new sources of income or strategic advantage. The two instances of Micro-Enterprises Carmine is leading at this moment fall squarely in this second category:

• The Consumable, Accessories, and Services Micro-Enterprise was launched in February with the goal of complementing the core business of white good appliances (refrigeration, washing machines, etc.) by extending the existing customer journey through new, value-adding touchpoints and experiences. It includes 20 full-time members, half allocated centrally and half in the market. The unit is destined to become both larger in terms of resources and better balanced across markets and channels. In a five years time span, nearly 90 colleagues will be invited to join, with 20-25% of them in Haier Europe’s headquarter and the remaining part distributed across geographical areas, with the goal of supporting local initiatives, reducing the distance from customers, while still acting as a single community. The service and technical components of the offering are still getting finalized.
• WashPass, a yet emerging Micro-Enterprise meant to totally rethink the experience of washing clothes from buying a washing machine to simple use based on monthly subscriptions and from manual cleansing decisions to disaggregated chemistry, an IoT-enabled functionality that allows the machine to autonomously sense the composition of its content, pick and mix the right detergents and even check when it is time to replace them, according to a zero problem concept. Through an entry fee, customers will choose and pay for the profile, determined by the number of washing cycles (e.g., 200 or 300) they desire. In this case, the team composition still closely mirrors the project from which it originated, with two dedicated members plus some time from colleagues in supporting roles. The subscription-based model will be gradually extended from the washing machine to the dishwasher, the oven, and cooling furniture to end up with Haier’s entire ecosystem. To achieve this, the core team will grow to 5 full-time people plus individuals in charge of covering all the markets. Distribution and commercial activities attract most of the energy in these early phases. WashPass is a real breakthrough in an otherwise stable and not-so-innovative industry. Its consumption-based and internet-enabled model could be easily applied to both accessories and consumables for washing machines.

Why launch new Micro-Enterprises?

According to Carmine, Micro-Enterprises are particularly suited to support disruption because of the focus and the energy they attract to hard-to-understand and hard-to-sustain new initiatives (those that are less mainstream or mature). Interestingly, this is true both for extraordinary, extreme growth ambitions in already served strategic segments and when upending market rules is the goal.

As a second but not less relevant benefit, Micro-Enterprises structurally infuse a zero-distance attitude in any part of the organization by making a small team fully responsible for the end-to-end chain of services final customers receive.

Drafting an ecosystem of inputs and enablers to support Micro-Enterprises

Yet, a formal allocation of talent to new roles is not enough for Micro-Enterprises to materialize disruption. Carmine shared a plethora of valuable points of attention and solutions that entrepreneurial firms may want to ponder:

• Balancing entrepreneurial drive with enabling support – It all surely starts with the entrepreneurial energy new units must possess to take over autonomy, risk, initiative, and responsibility. Such a basic propellent is not necessarily common or even required in most traditional organizations. Those willing to walk this path have thus to search for, attract and nurture the proactive, can-do, self-motivated mindset the RenDanHeYi demands. At the same time, customer-facing, disruptive ventures will inevitably introduce friction, even conflict, when interacting with the internal services they will need to get the job done (IT, HR, Finance, etc.). Micro-Enterprises’ leading goals and their results-driven approach will easily clash against corporate-facing structures’ rule-based, bureaucratic world. In other words, it’s within support functions, corporate personnel, and control layers that inertia may surface in the form of delays, misalignments, power struggles, and erroneous prioritization. Haier Europe explicitly reflected on how to avoid sabotaging business value creation and growth by tapping into customer needs (user scenarios) and involving all the necessary parties from the beginning (co-creation) to establish a common line of sight, intent, awareness about their impact, and commitment (Ecosystem Micro-Communities) between entrepreneurial units (Micro-Enterprises) and unbundled enabling teams (Shared Service Platforms), at the benefit of smooth coordination and collaboration.
• Rewarding individuals as entrepreneurs – A fair base salary is insufficient to attract and retain motivated, curious, and determined people to reach ambitious results. What is even more important is to let them fully participate in the profit, even extra profit. In Haier Europe’s case, some base targets have been established to let the Micro-Enterprise fit into the overarching goals and strategic guidelines the company is committed to. Still, the invitation is for every individual to do much better, to smash the budget and MBOs, without leaving any money on the table for competitors to grab. The profit component that exceeds targets is thus distributed to the team to re-pay the risk of being (at least a part-time) entrepreneur.
• Rethinking what a manager should look like – While the new Micro-Enterprises in Haier Europe still feature the role of a leader, taking responsibility for, energizing, guiding, and representing the team, much more thought is given regarding how to hold the space for each member to come up with ideas and feedback safely, with freer interactions across all levels in a horizontal fashion. Even mistakes, especially those bringing precious learning opportunities, are actively welcome. Instead of calling the shots, the leader takes care of involving his / her colleagues and helping them contribute their best. The same leading goals are no longer decided in isolation to become a further opportunity for listening, engagement, and inclusion of the entire group.
• Is even the employee still the same? Micro-Enterprises require the courage to get out of the comfort zone, re-consider the status quo and constantly embrace new ways of generating value. That’s why Haier Europe explicitly segments candidates and the employee profiles it wants to hire by looking for a self-starting, self-motivating DNA. Micro-Enterprise owners and members should embrace risks and be able to evaluate them, to make educated guesses and well-pondered decisions.
• A transition from products to experiences – WashPass initially committed the mistake of devoting excessive attention to technical (hardware) excellence, instead leaving the service experience and its touchpoints a bit behind. No longer selling a washing machine but a service that also includes one entails a completely different mindset and a full process shift for the white good appliances industry that, in the case of Haier Europe, is only possible because of the collaboration among many previously disconnected actors. A transparent streamlining of all the contributions is decisive for the resulting satisfaction the end consumer will feel.
• Figuring out the right ignition point – Identifying the first entrepreneurs is a mandatory step in transitioning from a hierarchical to an entrepreneurial organization. But how to find them? Haier Europe leveraged a combination of spontaneous and top-down nominations. Intentionally introducing fresh resources from other companies or industries strongly accelerated the startup phase in this initial stage. Still, a generalized possibility for all employees to consider an entrepreneurial career keeps emerging as a fair, empowering, and effective choice in a future, more consolidated setting. More specifically, there is an expectation that the self-nomination of internal candidates will become customary when the pool of ventures, their maturity, and the rules of the game will be robust enough to offer convincing options to a broader group of owners.
• What happens when a Micro-Enterprise misses its leading goals? We have been positively surprised by the calm certainty Carmine demonstrated when talking about failure. He was adamant about how the extraordinary nature of the objectives targeted by Haier Europe also implies an extraordinary organizational model and the right to try and learn for the people living in it. Plans won’t surely go exactly as expected, but reverting back to a traditional design is not even considered a possibility.
• Seeking early market validation – In line with Haier China’s tradition of intense, proactive involvement of external actors in product/service co-creation, the European branch leveraged Carmine’s pre-existing relationships to collect insights about the new value proposition from colleagues in local markets. Progressive distributors, already close to the white good appliances leader, have also been engaged in stress tests. Still, in the end, the real feedback came from consumers with which Haier increasingly wants to entertain a more direct interaction to apply necessary corrections timely.
• How to sell entrepreneurship to hierarchical bosses – It’s no mystery how inviting resources to allocate their time to teams they formally don’t belong to may raise more than one eyebrow. Team-level (as opposed to individual-level) incentivation captured within MBOs (management by objectives agreements) can go quite far at nudging colleagues otherwise belonging to different parts of the organization to push in the same direction. In addition, the relevance of an outside-in, customer-driven, cross-functional and entrepreneurial transformation must be properly communicated and honestly sold to the former bosses of the pre-existing hierarchy, clarifying the 2-3 crucial steps traditional structures should aspire to implement. As an example, bringing WashPass into Milan’s Fuorisalone, one of the most important fairs for the sector in Italy, fostered both external and internal recognition.

Early success and a glimpse of the future

What has been the net effect of all the experimentation Haier Europe is going through, thanks to the RenDanHeYi? “Primarily the eyes of the people”, Carmine told us when exploring changes in employee behaviors due to the new model.

In only a matter of months, the increased freedom and autonomy guaranteed by the Micro-Enterprises raised the pleasure, engagement, and satisfaction individuals perceive. It may still not be a final, quantitative confirmation of business returns, but such leading indicators let Carmine be positive about the chosen direction, and the transformational effect of the RenDanHeYi will have in Europe.

Since 2019, also thanks to the sponsorship of Yannick Fierling, Haier Europe CEO, and of the rest of the senior leadership, the adoption of the RenDanHeYi in Europe has progressed substantially. Of course, not all of the constructs experimented with in China have been already introduced yet. Most notably, agreements for shared value creation involving multiple Micro-Enterprises called Ecosystem Micro-Communities appear to be still nascent on this side of the world. Yet, collaboration among internal structures and teams is already in place (think about support functions and customer-facing units) in a spontaneous, non-formalized way.

Right now, the European branch is busy consolidating the basic pillars while, at the same time, adding the following developments to the model:

• Scaling entrepreneurial ideas on many more opportunities and parts of the organization.
• Doing that while still protecting a certain overall order, coherence, and alignment for the company.
• Extending incentivation plans for Micro-Enterprise members along longer, multi-year horizons.
• Pushing for a clearer and more codified approach to collaboration between Micro-Enterprises.

We’ll keep following Carmine’s and Haier Europe’s work very closely to share with you further evolutions, emerging insights, and novel solutions reinforcing our common practice of organizational design inspired by the RenDanHeYi.

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

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

https://www.boundaryless.io/event/3eo-rendanheyi-masterclasspreregistrations/