Mr Zhang’s latest speech: why haier transformation in the Internet?

Mr Zhang oral:

enterprise transformation of the Internet era

the haier in the assessment of the global institutions, has four consecutive years was named the world white electrical first. Chinese white goods accounted for 49% of global share of about 50%. But China’s white goods brand in the global markets only 2.89% less than 3%, if less than 3% as one hundred percent, haier accounted for 89% to 90%. Our overseas mainly in the brand, the majority of Chinese companies is generally stick a card, so are all made in China, but the Chinese brand to see. Now we face a very big problem is the must transformation, enterprises have to do this, why transformation? Mainly challenges brought about by the Internet.

at the time of traditional enterprise, industrial capitalism are motivated by economies of scale and scope economy. The so-called scale economy, simple said is big; Economies of scope is in addition to the main business, related industry also to dry, simply be stronger. We raise the slogan of the bigger and stronger now, I think is economies of scale and scope economy.

but today, the driver has changed, become a platform. Such as electricity is economic platform, electricity development badly impact on present physical stores, and stores it’s very difficult to do business now. In the future and what? I think the Internet financial must now for the financial impact is very big. Then one may be the entity industry, CAD, CAM and 3 d printing, may have very big impact on assembly line.

now we are going to the whole structure of enterprise completely changed. Now there’s a phrase called “outside to middlemen, insulation within the wall”. When doing scale economy, scope economy, enterprises have contact with the outside to middlemen, such as purchasing; To sell through dealers, certainly this is between the user and have a partition. “Inside to heat insulation wall” is this an internal management. Traditional economy, the reason for so many management, because of asymmetric information, the user know information and enterprise information is different, so the enterprise should pass a lot of way to collect user information, this is dissecting, the larger the enterprise decision-making the slow, the larger the enterprise bureaucracy, this is what the Japanese call big enterprise disease.

silicon valley has a very interesting phenomenon, including Microsoft, all is the garage startup, but when enterprise development to world class is finished, it will be difficult to have vitality, it is difficult to have the innovation. Often because businesses have money, see the possible threat to enterprise, out of small businesses, will spend money to buy it, buy not let its development, but to eliminate threat to yourself.

we are now to solve this problem, such as the middle it together. As sales, we have a nationwide, below in the provinces across the country, the provinces tube of each city, each city tube each county, simply remove the county this level now, each county to people no more than seven, left the county to do. The headquarters of the county, all the information and information center together. The middle layer is how many people? Four thousand, all four thousand people on board are laid off. Early 2013 we are eighty-six thousand people, seventy thousand people by the end of last year, this year will be a reduction of ten thousand people. Therefore, Chinese enterprises must transform.

Master potter

the strategy, the country’s development has four stages, the first stage is the factors of production guidance, want to rely on low Labour, low cost, has the advantages of China now this stage does not exist. Into another stage is the investment orientation, investment in China now have become too much. Now is the third stage, the innovation oriented stage. We are now but really pay rise can’t stand it. South Carolina in the United States, in 1999, a worker’s salary and wages than is 19:1, haier now ratio is 4:1. The second is the tolls, this part of China is 18 times in the United States, because there is no charge for many U.S. highway, so overall, you don’t have any competitiveness. If it is to stay in China processing to others, do OEM for others, it is certainly not.

Chinese enterprise always in transition, no transformation is not. To give priority to with the size and scope from the original, go to the platform of enterprises. Platform type enterprise embodied in here to break the internal organizational structure, the middle should not exist in the middle of the platform of enterprises. In fact, a company, I think is three power: decision-making, using, salary distribution. Is a company of the three power.

in the past, all enterprises are tandem, first the strategy, strategy for doing business, and research and development, the development is finished manufacturing, manufacturing is sales, sales is finished after, this is a tandem process. Now turn it into a parallel, all the resources in this parallel mechanism, this parallel mechanism are responsible for all the links at the same time. Simple said, such as research and development in the past is not responsible for the market, to a plan task, developed, even if the conform to the requirements. But now your income is not developed results with you, but and user satisfaction is not satisfied with the hook. Therefore, gal enterprises from closed to open, developers are not necessarily my internal, external. So you see the United States wrote the book wikinomics there is a word very well: the world is my research and development department. The world is my research and development department, also can say the world is my hr department? Why do you have to do as much as they have limited my original enterprise, it is the enterprise boundary is a big change.

when it comes to traditional enterprises, faced with the problem of the founding editor of wired magazine Kevin? Kelly drew a graphics, like from the top of a mountain, the original traditional enterprise stand on the peak of the mountain, must now down to the bottom, new mountain to climb the Internet. I said that I’m afraid not, because, after all, you want to down to the bottom, now all sales all have no, I don’t have a meal? I think it’s a broken relationship, broken while standing. To live in a broken house relocation, always can’t say I to build a new house in place, it is quite good, but where I live? So we are dealing with, how to break in, break first, then make or break while standing, this is our ongoing business, sometimes to have certain effect, but overall is likely to be in a state of step into two step back.

we proposed the unity of one single strategy, the so-called “people” is our employees, the so-called “single” is the user value, every one, the staff and his user value. We are in September 2007, it’s time for now is a few years, it is difficult to do one thing.

the change of the management philosophy – the zero distance

traditional enterprise management philosophy has three main factors: the management of the subject, object and means. The so-called management main body is managers; Object is the manager, or to expand is people, goods, content, time and space, are you the manager management; Management is the mediation between the management subject and object, is the manager take advantage of this management by managers. But the fact is that in the Internet age, this must change, because of the Internet makes it the most important thing, I personally think that three words: zero distance.

management guru drucker has a word, the Internet eliminates the distance, this is the biggest impact. There is no distance, what now? Become more decentralized. Original with enterprise as the center, or to brand as the center, now the user is not on this, but with their own experience as the center. Actual as you can see, everyone is a commentator on the Internet, everyone is a news release, it put forward the very big challenge to management, the original management philosophy there is a problem.

our internal mentioned eight word: enterprise namely, namely enterprise. Enterprise is no longer the original management staff, but become a platform that is able to create an opportunity for employees, encouraging staff to play their part. We put forward a guest, every employee can start a business. We often hold a contest, external vc, please come in and talk about our employees can put forward the idea of investment, it is totally marketization. If you need to invest, he can also take investment, enterprises can also lend it to him, this and the structure of the original enterprise completely different. People namely so-called enterprise, hope that the people, employees are superior leadership command. So enterprise is one, is the enterprise to each person to become entrepreneurs; People in which companies, everyone can create a business.

enterprise culture – consider oneself in the wrong

culture is the soul of an enterprise, gene. Haier’s enterprise culture is the culture of a strain, for our internal just four words: consider oneself in the wrong, often should change their according to external changes. Our internal there is a word called “no successful business, only in the era of enterprise”. We think that there is no successful business, if you think you are successful, just dance to the rhythm of The Times. But times are changing very fast, you can always step in beat this is impossible, you want to do it.

the corporate culture is that you can not strain, if not strain, such enterprise culture is a self-righteous, feel they are already very good, in their own path to walk, there is no problem, this is definitely not. This strain is difficult, haier itself also encounter this problem, we emphasize culture in the past, everyone is a culture of executive force is very strong, but now requires everyone to start their own businesses, and not the same in the past. So this change is also very big. Enterprise culture also has a paradox, it performs well and deeply into the bone marrow, now can not immediately change to come over, actually also is very difficult, so we emphasize really can’t let it make a consider oneself in the wrong, strain culture.

another like Jim? Collins said in “built to last”, the enterprise leader’s localization is very important, corporate leaders should not be the time people and should be made zhong. Many business leaders say, it have a problem. What made zhong? Is to adapt to the changes of The Times, times several points, can follow change, rather than personal subjective will oriented. Now we have not done, of course, is to adapt to the age of the Internet, haier into a platform for enterprises, into the age of the Internet companies, everyone can play to their ability. I think this actually can be recognized in the world.

we bought before white Japanese sanyo electric, sanyo white electrical part of the loss for many years, the most serious division lost eight years, we come over eight months after the check out, is very important for one reason, is to change its corporate culture. Japanese culture is team spirit, and then a sequence is the staff salary, why is this? Cultural gene in it. Japanese culture is actually four word: senior from, who is the honour person who listen to the leadership of the who is. We put Japan in the eighty s as a learning example, but by the end of the age of the Internet, Japanese companies have a problem, isn’t it is not, nor is it a bad quality, but it is a problem with the culture. The age of the Internet is no longer listen to Sir, because the biggest problem is that the Internet change quickly, you don’t see what is the change of the market, if I listen to the boss again, this must be done wrong. So we went to the later, will change the culture, we sign the contract is must find what is your responsibility to market, rather than to lead the execution of what it is.

IMD business school in Switzerland last year, a presentation, under a lot of, said professor in international merger and acquisition is the most difficult among the mergers, compatibility of culture, which often cause many problems. I said to him, culture of mergers, compatibility of merger and acquisition is a difficult problem, but I think that is a false proposition, why? World cultural forms are different, but the essence of man is the same. Like the German philosopher immanuel Kant said, people is the goal is not a tool. If he must be not as a tool. But whether American, Japanese or east asians, and southeast Asia, and Africa, all want to show their value, all want to show their abilities, and if you give him a chance, no matter what person he will agree with you. I think it’s back to a essence of corporate culture, is that you can make employees master, it is not empty.

in the past we said the old worker is the owner of the factory, doesn’t really do it, is what I said just now, any a small team, can you give him three rights: the decision-making, personnel patronage or personnel deployment, and salary distribution, simply can’t do. The small team set up, after our internal and a word is called the “soldiers” elect, the soldiers can choose his officer, officer, also can combine his soldiers, the head can be dry, not above appointment. Why can the soldiers picked the head down? For who can do they are very clear, you can choose him over, choose to come over later, some of them not, to get more done.

there is a word called with their own money for their own things, both efficiency and save money. With public office home thing sure is a waste of money and no efficiency. So say home, in fact or people, we here enterprise namely, namely enterprise. This is my some experiences of more than 30 years to govern ourselves.