Posted on 04/02/2017 9:09:41 PM PDT by 2ndDivisionVet
QINGDAO, China — After Haier Group bought the General Electric Co. appliance unit last year, the Chinese company's chairman says he gave its American managers unusual orders: Ignore me.
Zhang Ruimin built Haier from a failing refrigerator factory in the 1980s into the biggest maker of major appliances, a sprawling global enterprise that built its U.S business from a South Carolina plant.
Now, he is trying to transform a traditional manufacturer with 60,000 employees in 25 countries into a nimble, Internet-age seller of consumer goods and services from web-linked washing machines to food delivery.
To do that, Zhang has broken up Haier into a "networked company" of hundreds of independent business units with orders to act like customer-focused startups. He says GE Appliances will be given almost total autonomy....
(Excerpt) Read more at postandcourier.com ...
Great article...thanks for posting. Who would ever of dreamed that such management innovation would come from China? I worked there for 7 months 40 years ago and “management” was an unknown word. After 7 months, I was halfway through a steam plant startup that would have taken all of two weeks in the US.
The funny thing is Zhang is teaching GE Appliances new tricks. I thought Welch and Imelt were the management wizards who were supposed to have run lean, efficient, customer-centric, and profitable organizations. Now we have Chinese owners / managers that are doing that. What a turn of the worm.
Splitting up his companies into many “start-ups”. Very interesting approach. “I’m not your boss”, another very interesting approach. Well, looks like its working so far.
I have a small Haier refrigerator that’s worked great for over 10 years. It keeps Diet Cokes at exactly the right temperature - that is to say, a bit of ice is formed when opened.
In, New Principles in Administration for Quality and Efficiency (speech by W. Edward Deming in Manila, Philippines, July 2, 1971) Dr. Deming laid out 19 principles. The full list of principles is included in The Essential Deming, page 176-178. Two I find particularly insightful and instructive (especially when you consider this is from 1971).
Principle 16. The consumer is the most important point on the production-line. Consumer research and testing in service are statistical problems.
Principle 17. No one can measure the loss of business that may arise from a defective item that goes out to a customer.
The idea that the consumer is the most important part of the production line seems to still be missed by most organizations.
Also have a Haier 8,000 btu window AC going on 9 or 10 years.
bmp
One thing I think is important that I never see mentioned is the used market.
A lot of people get exposed to a company’s product by obtaining it used. Could be a hand-me-down from a relative, or a purchase in the secondary market.
It’s a huge opportunity to make a favorable impression on a future customer, especially when your product in the used market is close in price to a new product of a lower tiered competitor.
Far too many companies ignore any consumers after the original buyer by refusing to provide support or parts. Now, I know there’s a cost and I know there’s a limit to how much you can spend (products can’t be expected to last forever), but I think too many companies don’t give consideration to this - the automakers are prime examples of this but not the only ones.
If I get good service out of a used product (and expectations are generally a bit lower since it is used), then I’m more likely to invest in a new one next time around. If I get poor service (also considering expectations), then I start to wonder if it’s worth paying the premium for new if the company’s not making products that last.
I’m not really familiar with Haier other than those miniaturized, ventless washer-dryer combos that are popular in RV’s and with people in small apartments. They’re reasonably well regarded there, but the segment as a whole is sort of hampered by constraints on what the unit can do and consumer lack of familiarity. If you try to get clothes completely dry they’re going to be very wrinkled, trick is to get them out very slightly damp and hang them up immediately. Then, it works just fine.
Headquarters acts like a venture capital investor: Employees propose new businesses and, if Zhang and other executives like them, receive financial backing. They have to hit financial targets but are left to manage the venture.
The idea that the consumer is the most important part of the production line seems to still be missed by most organizations.
Back then, American manufacturers didn't want to listen to him, so he took his ideas to Japan, where companies accepted them wholeheartedly. The result is history.
It looks as if the Chinese are taking the pages of his book seriously.
I seem to recall that Florida Power &Light won the Deming award in the 90’s.. First non Japanese award winner.
Excellent overview of the effects of application of the Deming Method.
I worked for GE Appliances for 31 years. The buyout allowed me to take my pension early and retire.
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