Zhang internal conversation: How to turn strong executive force into an entrepreneurial platform

Absrtact: July 8, Haier CEO Zhang and Boston Consulting company chief Executive Officer Li Ruilin had an exchange of ideas on how to turn the strong executive force into an entrepreneurial platform. Zhang proposed the most fundamental problem of organizational change-culture. This time on

July 8, Haier CEO Zhang and Boston Consulting company chief Executive Li Ruilin a discussion on how the strong implementation of the organization into an entrepreneurial platform of the exchange of ideas. Zhang proposed the most fundamental problem of organizational change-culture. This dialogue is very high in gold, you have to read.

Haier CEO Zhang

Li Ruilin: The biggest change in the U.S. economy over the past 40 years has been a doubling of the rate at which the corporate matrix has been recycled. I have just seen the exhibition of your company and see the comparison between the 1984-year washing machine and the current production of advanced appliances. Sony is also from the original production of rice cookers to the current production of advanced electronic equipment, you grow faster than they do. So it makes me think that the world does change very quickly. We are here today to talk about the changing world, to talk about innovation, to talk about the adaptability of companies.

Zhang: We are now at a critical time for change. There are two main problems, the first is the concept, the second is the organization. In terms of concept, I always think that corporate culture is a double-edged sword. Our original culture is very strong execution, Haier's everyone should be implemented in place. Now Haier is no longer a strong executive force organization, but become a platform for entrepreneurship. People's ideas are very difficult to turn around. Haier is a good corporate culture, now may hinder Haier forward, hinder Haier change.

The second is the change of organizational structure. Our original organizational structure is also a hierarchical system, like the pyramid, now the organization must be flat and networked. You have to lead a start-up team, and many of the hierarchy managers in the organization either leave or compete for an entrepreneurial position. I talked about this in Florida with IBM's original president, Gerstner, who says big businesses have to. He also wanted to do it at IBM, but never dared to do it because he thought it might involve the whole system. I really feel it now. After doing so, all aspects of the Organization have to be changed, all of a sudden spread to everyone in the enterprise group, and even many departments have to be canceled.

To turn such a large enterprise from the control organization into an ecological organization, platform organization, in front of us there is no model. We are doing it ourselves, and many experts, including American experts, have come to think that the plan is right, and we ourselves think it is right, the problem is that the programme does not have a significant impact on performance, and if the performance is affected too much, people will question it. I watch the World Cup has a great experience, the Brazilian team there to play, the commentator said the Brazilian team this formation is not good, the tactics are not, must be troublesome. The result is the other people scored, he immediately said Gee I nonsense, they this kicking method is OK, this is a typical success or failure of the hero.

Li Ruilin: In 1990, my predecessor, the CEO of the Boston Consulting Group, wrote a very small, but profound article. He likens the management of future companies to jazz and symphony. He thought the company was like a symphony orchestra, and the executive was the conductor of the band, who commanded the band to play the music. The future of the company should be like jazz, jazz more attention to each musician's individual performance and listen to each other, in the dynamic process of playing a music. I think Haier is a good example of the development of the business to jazz.

The question you mentioned about the flattening of the organization is very agreeable to us. At the same time the level of reduction, not only to reduce costs, but also to promote the creation of people, so that the culture become more dynamic. Many years ago, one of our partners joined General Electric to become Welch's chief strategist. I had a conversation with him recently, and he told me he felt that Welch led GE for so many years, the most influential move is to turn the number of organizational levels into eight, a reduction in the number of levels, so that GE has become more innovative and entrepreneurial drive.

I would like to talk about the problem of adaptability, I think the development of companies, we must enhance their resilience. How to enhance its adaptability, how to become an ecosystem-type platform enterprises, I think there are several points. The first step is to enhance the perception of direction. When an enterprise adapts to something outside, it must first be sensitive to the signal of change, because we have no way of planning control of the environment.

The 2nd is the hardest point you mentioned just now is how to change from the organizational structure to make the enterprise more adaptable and free to allocate resources.

The 3rd is how to attract people to join the ecosystem. This ecosystem is not just your company, it's made up of companies that have different strengths. Because we cannot control or own other companies, we cooperate with each other. Cooperation is based on trust, we have shared values to promote mutual trust, and I call this the social advantage in the biosphere.

Finally, as a leader of an organization, make each part of the organization less evenly. We want to do typical business in some parts, and some to do business that can be strained. This will cause contradictions in all aspects, the art of the leader is how to reconcile contradictions, how to balance. For example, there may be a contradiction between innovation and efficiency, and how to resolve this contradiction is very important.