The RenDanHeYi in action. Learning from global practitioners

Abstract

Earlier this year, Boundaryless hosted the annual event dedicated to pioneers and global RenDanHeYi practitioners to assess their progress and share key learnings along their transformation journey. The meeting has been an opportunity to explore different paths, strategies, and nuances toward becoming an Entrepreneurial Ecosystem Enabling Organization (3EO).

Thanks to it, we had the fortune to interact and compare notes with firms:

• Headquartered in different continents (Asia and Europe)
• Focused on different industrial sectors (Manufacturing, Software Development, Digital Communication)
• Animated by different cultures
• Characterized by dramatically different dimensions (Hundred of thousands, thousands, and tens of employees)

The companies have been represented by some of their senior leaders:

• Michele Amati, Group Sales and Marketing Director at Asa Group
• Prashant A, Head of Digital Platforms and Solutions for Mobility at Bosch Limited (now MPS)
• Fabrizio Martire, CEO at Gummy Industries

In this post, we’ll explore questions touching upon how to:

• Establish a systemic framework for identifying and implementing new ideas
• Give employees an entrepreneurial role and benefit from it
• Reduce the distance from customers and involve them in the innovation process
• Let all ecosystem participants be more engaged thanks to increased freedom and responsibility
• The most effective steps and solutions for revamping a traditional organization
• Attract the funding necessary for organizational experimentation, even if you are a small company
• Pick people and pilots to energize an initial piloting phase
• Face the inevitable fears often blocking both senior leaders and professionals

We hope the conversation could shed additional light on the reality, complexity, and enormous potential hidden in RenDanHeYi’s transformation for the practitioners who joined us at the event and the entire community of leaders, managers, and organization design experts.

If you want to learn more about RenDanHeY, Please consider joining our online 3EO/ RenDanHeYi Self-Paced Training at any moment or express your interest in 3EO / RenDanHeYi Live Masterclasses that will be scheduled in 2024.

RenDanHeYi in Action. Learning from Global Practitioners

Earlier this year, Boundaryless hosted the annual event dedicated to pioneers and global RenDanHeYi practitioners to assess their progress and share key learnings along their transformation journey. The meeting has been an opportunity to explore different paths, strategies, and nuances toward becoming an Entrepreneurial Ecosystem Enabling Organization (3EO).

Thanks to it, we had the fortune to interact and compare notes with firms:

• Headquartered in different continents (Asia and Europe)
• Focused on different industrial sectors (Manufacturing, Software Development, Digital Communication)
• Animated by different cultures
• Characterized by dramatically different dimensions (Hundred of thousands, thousands, and tens of employees)

The companies have been represented by some of their senior leaders:

• Michele Amati, Group Sales and Marketing Director at Asa Group
• Prashant A, Head of Digital Platforms and Solutions for Mobility at Bosch Limited (now MPS)
• Fabrizio Martire, CEO at Gummy Industries

We hope the conversation summarized in this post will shed additional light on the reality, complexity, and enormous potential hidden in RenDanHeYi’s transformation, not only for the practitioners who joined us at the event but also for the entire community of leaders, managers, and organization design experts.

Here are the main aspects we touched upon together with the reflections shared by our guests.

What’s the unique business value that brought you to the RenDanHeyi?

• Bosch: any large company has limitations in terms of impact going into the future world. Even those with 450K people, nearly 100B in sales, and R&D spending set around 8-9% of sales. Bosch India wanted to empower employees to generate more value exactly where information is generated and where customer transactions happen. Instead of centralizing this at the top, they longed for a sort of “aligned autonomy.” Even if it may sound like an oxymoron, Prashanth referred to a common need for coherence between the brand and the firm’s image on one side and ample autonomy in the different regions on the other.  Their second question was about building ecosystems going into the future through enough skin in the game and the right talent coming on board. The firm horizon had to be expanded from attracting employees to supporting entrepreneurs. Bosch’s executive board was looking into ways to sincerely include the ecosystem of partners, integrators, developers, and potential candidates around them. The RenDanHeYi adoption offered them the space for reflection, building a systematic decision-making approach to address it and keeping it aligned to the larger values Bosch has related to technology leadership and impact in the world.
• ASA:  Being connected to the manufacturing of cans, ASA Group was a traditional company in a traditional industry, not really at the forefront of innovation regarding what they do and the needs they address. During COVID-19, in March 2020, the companies realized how they couldn’t make centralized decisions to face the situation. Even after that, change kept coming at least every six months. Their pure command and control governance wasn’t perceived at par with the reality they were living in. The RenDanHeYi provided answers to similar speed, adaptivity, and power distribution needs. Zero distance or customer centricity was a key aspect for them. Building an organization more aligned with its values and the ability to directly connect each person (customers and employees) during value creation was intriguing. Blurring the company’s boundary to include partners and other external actors more seamlessly in value creation was another appealing factor. Where does the company end?
• Gummy. 2 years ago, Gummy Industries had 50 people and a number of management issues to face, including being too slow to react to market changes, a certain level of internal confusion, a lack of creativity, and a lot of overwork due to a classic organization model and team structure. More specifically, each member was involved in many projects, and thus, many teams referred to different clients and multiple deadlines. After exploring other models, such as Holacracy and Sociocracy, Boundaryless introduced the two co-Ceos to Haier’s RenDanHeyi, which surprised them with its alignment with the company’s desire for freedom and responsibility. This is when Gummy decided to give it a try. After the first six months, the main management struggles were being addressed, and the founding team also discovered unexpected solutions, opportunities, and entire business models emerging from the subsequent second phase of RenDanHeYi exploration.

Which are the main concepts, principles, and organizational artifacts inspired by the RenDanHeYi that guide your company’s evolution?

• ASA: After many internal discussions and personal psychological maturation, the company embraced a scientific, experimental approach through several micro-enterprise pilots. Thanks to an onboarding and co-creation process, three pilots have been selected: 1 Shared Service Platform composed by our former Logistics department, one new product supported by digital tools, and the amendment of a commercial process are by design different in nature, in order to test the effective results and the challenges that such a transition entails. During the summer, the board and a selected group of leaders and internal influencers designed all the crucial aspects for each pilot with the intention of launching the new Micro-Enterprises at the end of the year. This process is already helping to understand what works and what must be changed because it didn’t produce the results expected. The company expects the same process to be repeated with other pilots and areas of the company. During the conversation, Michele acknowledged an emotional challenge in this journey both among the top management and the colleagues who agreed to participate in the pilots. Achieving this double commitment has been a clear point of attention since the beginning of the project. Ultimately, the entire group decided to believe in it, to face the inevitable hurdles without returning to its comfort zone, even when facing external challenges due to the market. Each company will raise some reasons not to try, but lack of commitment would kill the experiment immediately. Any deep organizational transformation necessarily demands personal change with emotions and fear.
• Bosch: the first element for Bosch India has been establishing a long-term vision of where the RenDanHeYi could have brought them. They knew it would be a long process for a company of their complexity. Together with that, the people-related nature of the transformation was immediately acknowledged. Differently from a SAP implementation, Bosch was aware of the impact on the basic ethos of the organization, from programmers to salespersons. To them, it all became about pondering three conditions: the existence of a strong pipeline of problems, ideas, and solutions for new products and services, the introduction of a systematic process to transform ideas into business cases, and the ability to evolve business cases into robust businesses with a clear and supportive home within Bosch’s organization chart. Prashant expected that for each venture to go through the three steps, it may have taken anything between 3 months and 3 years, depending on the nature of the business (for example, SaaS vs hardware); nonetheless, the power of the RenDanHeYi was connected to the amount and clarity of the decisional freedom each micro-enterprise would have benefited from. The framework offered a general direction, with the adaptation to each firm’s specific conditions and context being a crucial additional responsibility. As a board, they spent hundreds of hours co-designing the new model with Boundaryless, considering processes such as Purchasing, Sales, Code Development, etc. The initial findings are described in an organizational playbook with the role of creating a psychological safety net for all colleagues to experiment, operate, and even fail within. They surely met some internal resistance.
• Gummy: at the beginning, explaining the RDHY to a colleague without any knowledge of organizations, finance, or economics was too complex. In line with the company’s mandate, Gummy started with communication aspects by taking inspiration from the food industry, something very important in Italy, to articulate the language to use. The new model has been described through kitchens (Micro-Enterprises), chefs (micro-enterprise leaders), brigades (Micro-enterprise teams), and restaurants (Micro-enterprises incorporated as new legal entities). Employees came up with ten ideas for new ventures and services, 5 of which actually became new micro-enterprises, and developed new menus (catalogs of services exposed to the market). This choice simplified the communication, facilitated the acceptance of new concepts, and helped colleagues to get on board. It also helped express the freedom new kitchens and chefs would have enjoyed. Freedom also meant individuals’ autonomy in selecting the micro-enterprises they wanted to be part of. Communication thus contributed to addressing the people aspect and the different speeds that characterized different individuals. Regarding talent for new Micro-Enterprise, Fabrizio and his Co-Ceo specifically searched for emerging leaders that mixed entrepreneurial drive with responsibility. It has been considered fine for other colleagues to join Micro-enterprises with more of a team member role based on the best fit among aspirations, competencies, and micro-enterprise context.

How to secure the investments for running a RenDanHeYi experimentation?

• Gummy: The company wanted to experiment with the RenDanHeYi without losing any revenue. That’s why, during the first 12 months, the focus has been to evolve the organizational model while still serving clients through stable teams providing pre-existing capabilities. Starting from the second year, new ideas for services have been included as value propositions for emerging Micro-enterprises. The founders took on the role of honing and consolidating such value propositions, thus attracting new clients and new business together with new entrepreneurial teams.
• ASA: Allocation of funding can be transparent through the RenDanHeYi. The VAM represented a way to nudge micro-enterprises to elicit their requests regarding people, resources, and returns. This both links the budget obtained to the results eventually produced and reduces the fight over funding by eliminating political turfs through cross-unit visibility. Another possibility offered by RenDanHeYi was to take ideas outside of the company to attract investments. Such a step validates the initial idea, based on which the company may add further funding.
• Bosch: The why of the transformation was the central step to finding investments in a large organization like Bosch. The question for them was how to unlock the extra energy required for employees to spot opportunities and take advantage of them. Such a need is crucial for incumbents with lots of cash as, without it, firms in the NSE (New York Stock Exchange) would have always kept their position and advantage, while this hasn’t been the case in the last few decades. Through the RenDanHeYi, they found the means to engage employees and transform them into entrepreneurs. Not many companies have survived for 137 years like Bosch. To thrive for over 100 years as an organization, they decided to look at society and understand how that will reflect in organizational structure. Money can be raised, as many startups do, but only if you have a reason.

How are people and pilots selected?

• ASA: Among their three pilots, Logistics autonomously decided to change its model and offer its services to the market. Another team wanted to launch an entirely new product and technology, and a final one saw an opportunity for decoupling the production from the access to the market. ASA’s choice has been made by considering both the business need/potential for new ideas and the sincere commitment of the wanna-be micro-enterprise leader. At the same time, participants in the pilot wanted to be reassured that they wouldn’t have been punished in case the experiment failed. Such a step demanded lots of patience, education, and communication.
• Gummy: Gummy selected pilot participants based more on their attitude than their financial acumen. Good candidates had to be independent, able to handle a significant amount of stress, and adaptive to change. Having a long internal history and being trusted by their colleagues was also considered relevant.
• Bosch: For Bosch, giving all the employees a choice about if to participate in a RenDanHeYi experimentation wasn’t necessarily the best strategy. Such a space would have prevented the company from evaluating if a piloting phase was working since one of its parts would have worked entrepreneurially while others would have not. Achieving a full buy-in in a large group of participants was among the initial goals. Industry Platforms have been introduced to make clear the areas and challenges the company wanted to put energy on. Most participants initially were very cynical, comparing the opportunity at hand with previous, often failed, experiences. The board devoted attention to guaranteeing that some business ideas would be effectively translated into prototypes and then into products in the market. To engineers, of which Bosch’s ranks are rich, bringing a product to the market was probably more satisfying than generating revenues. The company invested nearly three years in structuring and nurturing a pipeline of opportunities and enabling capabilities entrepreneurial employees could look at. Only after that they had the need to enable means for the community to filter good ideas systemically. It has been a long process.

What was the biggest surprise you had so far?

• Bosch: A surprising realization was how people could be motivated by something other than money and, specifically, the opportunity to create something new in an ecosystemic context. A second surprise was seeing the vocabulary change in a relatively short timeframe and the way of thinking changing with it. Such a shift allowed everybody to raise their hand and attempt to attract an investment in new ideas. It wasn’t the case before the RenDanHeYi introduction.
• ASA: When colleagues got invited to embrace micro-enterprises, they started to perceive a broader picture of problems and opportunities, those that an entrepreneur would see. To successfully approach such a new role and responsibilities, the company had to help them with new skills. Also, the amount of courage to move forward with a steep transformation like RenDanHeYi was simply massive. It entailed facing many fears that the top management and other employees had to overcome.
• Gummy: Among the best outcomes the company secured, the best one was probably a new attitude towards the nature of work. Not only micro-enterprise leaders but all team members now give their best to develop new solutions and process improvements. For example, in Gummy Industries, lead generation has been fully transferred to micro-enterprises. Also, the resonance of the work with people’s desires and expectations has strongly improved since service offerings are guided by them.

Boundaryless’ Takeaways

On top of the interesting perspectives shared by the pioneers that animated our event, the conversation with them raised 15 more general considerations about the role and complexities of RenDanHeYi transformations. A synthesis of them is provided below:

• The magic of freedom and coherence. Messy coherence, mixing coherence with speed, diversity, and autonomy at the edges, is probably the harder question most firms face in an unpredictable market like ours. In the past, hierarchy guaranteed coherence but at a big human and opportunity cost. The RenDanHeYi is uniquely qualified to provide both of them at the same time, unleashing human potential. This is the dream that both employers and employees are interested in exploring today through Haier’s management model and philosophy.
• Embracing intrinsic management uncertainty. In a RenDanHeYi transformation, there is no given target operating model to aim for or impose. Given the expected outcomes, the approach must be much more experimental, with many attempts to learn from. Such an approach generates fear, resistance, and confusion for most managers.
• Betting on who you are more than what you do. The RenDanHeYi is as much about who you are and what you want to bring to the world as it is about organizational artifacts, hacks, and solutions. A serious reflection on values, beliefs, expected outcomes, and the sincere openness to letting go of control happens at the very beginning of its adoption.
• Systemically transforming a firm into an incubator. Openness and autonomy are not simply an attitude or even only a pipeline of ideas. The RenDanHeYi transforms them into a systematic framework for holding the space and empowering everybody in the organization to comfortably and confidently pursue their initiative under a common set of rules. Without that, not even the CEO will be able to protect the necessary room for diffused and effective innovation.
• Words matter. Communication helps change culture and mindset, demonstrating a safe space for entrepreneurship and more proactively contributing to a team as a simple micro-enterprise member. The right communication strategy will reduce most organizations’ natural resistance to a RenDanHeYi transformation.
• Invest in people’s freedom. In most of the evolutions Boundaryless has followed, work allocation is open because people can choose where and how to spend their time based on their attitudes, skills, and desires. Even this one is a small revolution for those firms in which employees’ roles and contributions have been decided centrally (not by them) forever.
• Self-management is not about total decentralization. Not everything could or should be decentralized. The RenDanHeyi stresses how some common services (SSPs) are necessary to help employees become successful entrepreneurs and let large organizations protect efficiency and effectiveness.
• From owners and managers to catalysts. Founders themselves should shift from the role of equity owners and bosses to facilitators for others to take a step forward and create their venture. This venture generation ability kills organizational and technological debt, allowing firms to innovate at the speed of the market.
• The RenDanHeYi doesn’t require huge budgets. Gummy Industries and MAQE in Thailand show how the transition to a dramatically different organizational model, such as the RenDanHeYi, can be executed without disrupting the current business model. They both leveraged a gradual transition with increasing validation and time/money investment to incubate design novelties more easily and still protect any revenue and client relationship.
• RenDanHeYi is a strategic, not organizational, play. ASA and other examples suggest how connecting a RenDanHeYi transformation to strategic priorities and planning is important. Tapping into them allows for a better use of the available funding and, at the same time, removes many uncertainties and roadblocks that could be present at the beginning.
• There is no RenDanHeYi without P&L autonomy. Transferring investments and profit & loss to a micro-enterprise is the epitome of power distribution. Without that, we are stuck with much more traditional forms of intrapreneurship already available before the RenDanHeYi. Distributing P&L requires a large dose of courage.
• Being spotty is fine at the beginning. In the initial phases of the transformation, most organizations have a spotty pattern in their adoption, with different areas exposing different levels of maturity. That is perfectly natural when following an experimental approach and not having developed a fully standardized framework that can be communicated and transferred to all employees when they join.
• Think about how to pick pioneers and pilots. There are multiple approaches to choosing RenDanHeYi pilots. At Boundaryless, we are using a pilot evaluation framework with a number of criteria, such as the business potential, the size of the investment required, the expected time to market, and the time availability key people would put in. It is a repeatable path to build a portfolio of potential micro-enterprises.
• Develop an incubation framework. To transform a traditional organization into a platform that continually incubates new ventures, an ongoing process of creation, maturation, and evaluation of ideas is required. This second layer of transformation is mandatory and should be developed while conducting the piloting.
• The RenDanHeYi is able to evolve even large incumbents. Even large organizations can be energized by the sincere courage to evolve their business and structure. Similar examples should infuse confidence and interest in other firms.

What are your takeaways from the event? Do you still have open questions that would like to see addressed? Tell us more in the comments.

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

If you want to learn more about RenDanHeY, Please consider joining our online 3EO/ RenDanHeYi Self-Paced Training at any moment or express your interest in 3EO / RenDanHeYi Live Masterclasses that will be scheduled in 2024.

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