Haier

Haier

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What are microenterprises?

How do entrepreneurs set goals?

What are ecosystem microcommunities (EMCs)?

How do microenterprises find service providers?

What are contracts?

How are products and services developed?

How do entrepreneurs get paid?

What financial statements are used?

Question # 1 What are microenterprises?

https://www.haier.com/ is divided into more than 4,000 microenterprises.

10-15 people work for a microenterprise.

https://www.goodreads.com/review/show/3397074094 Pages 120 and 135.

2 types of microenterprises # 1: Customer facing microenterprises Examples: Local stores, internet shops and repair teams.

# 2: Support microenterprises that sell products and services to customer facing microenterprises Examples: Purchasing, manufacturing, marketing, design and delivery.

https://youtu.be/AhdjLXdxnFc

Microenterprises have 3 rights # 1: Strategy Each microenterprise decides itself a) which opportunities to pursue, b) what partnerships to form, c) who to collaborate with and d) how to meet customer needs. # 2: People Each microenterprise decides itself a) which people to hire, b) what roles and responsibilities people have, c) how people are educated, and d) which people are fired and e) how leaders of microenterprises are replaced. # 3: Pay Each microenterprise decides itself a) how high the base salary of which people are, b) how high bonus payments are, c) how shares are distributed among people and d) what other incentives people get. https://youtu.be/AhdjLXdxnFc

One way to differentiate ecosystem-based organizations is to consider them as horizontal and loosely-aligned networks of self-organized, selfdriven, self-optimized organizational units, which Haier calls microenterprises.

The autonomy of microenterprises is not absolute, as microenterprises still operate within the principles and managerial environment of Haier.

The loose interdependencies between the members of an ecosystem are a source of strength. https://onthehorizon.substack.com/p/on-the-horizon-weekly-ecosystem-structure

Microenterprises are grouped into platforms.

For example, 50 microenterprises are members of the "cooling platform."

https://www.goodreads.com/review/show/3397074094 Page 125.

A platform leader serves microenterprises by helping them save money and time.

For example, a platform leader 1. coordinates large investments in technology and facilities, 2. identifies opportunities for microenterprises to share resources, and 3. supplies microenterprises with customer information.

No one reports to a platform leader. https://www.goodreads.com/review/show/3397074094 Page 128.

Question # 2 How do entrepreneurs set goals?

6 characteristics of a work target: 1. A work target can be created by any microenterprise in Haier.

2. A work target clearly describes what task / job / product the microenterprise wishes to outsource. There’s a statement of what needs to be achieved.

Example: Help us produce and sell 1,000 washing machines.

3. Background and market information is provided.

4. How value for the customer is measured is set out.

5. Potential rewards for different levels of performance are specified.

6. Any entrepreneur can apply / bid for any target and, if accepted, become responsible for it.

https://corporate-rebels.com/no-more-ass-kissing/

People, who work for a research unit, collect information about how fast sales of all kinds of products can grow and use this data to help each microenterprise set goals.

https://www.goodreads.com/review/show/3397074094 Page 122.

At Haier, a person, who wants to become a leader of

a microenterprise, can present his or her plan to the 10-15 people working for the microenterprise.

The team decides who will lead the team.

https://www.goodreads.com/review/show/3397074094 Page 137.

Question # 3 What are ecosystem microcommunities (EMCs)?

Example of a plant based food ecosystem micro community (EMC) 1. Jody gets the idea of creating plant based food.

2. She initiates a “plant based food” ecosystem micro community.

3. She sets a goal, for example x users and sales of USD y.

4. She communicates the goal openly over the Internet.

5. Microenterprises in Haier as well as external businesses bid for the goal and provide plans to meet the goal.

6. Jody invites microenterprises within Haier and/or external businesses that she believes can help her reach her goal.

7. She creates electronic contracts with those microenterprises and/or external businesses.

8. She makes transparent and constant follow-up on the performance of each business.

9. Based on user needs changes are made continuously.

10. A value cycle is created: Creating value – delivering value – sharing value.

6 characteristics of an ecosystem micro community (EMC) 1. An open and dynamic unit that is formed by many small microenterprises and external partners.

2. Solves problems of collaboration among Haier microenterprises.

3. Solves problems of collaboration between Haier microenterprises and external partners.

4. Builds an open and win-win ecosystem.

5. Is formed through spontaneous linking.

6. Uses relationships based on contracts – not hierarchical relationships.

Examples of ecosystem microcommunity (EMC): 1. Coin laundry.

2. Developers who create apps that enable people to book washers and dryers in advance of using the machines.

3. Laundry users.

Marshall W. Meyer: Haier’s Internet of Clothing. Part A. Page 1.

An ecosystem micro-community (EMC) is characterized by crossboundary industrial cooperation. It becomes possible to lead each industry out of their own field and give them a larger view of their industry.

A benefit of an ecosystem micro-community (EMC): When you find needs of customers, you can integrate resources from different industries, which creates new market and fulfills new needs.

Marshall W. Meyer: Haier’s Internet of Clothing. Part A. Page 5.

Question # 4 How do microenterprises find service providers?

If a microenterprise needs a specific service related to human resources, they search for people / organizations that can provide that service.

They can write a contract with 1. a microenterprise within Haier or 2. with a company outside of Haier.

https://corporate-rebels.com/evolve-or-die/

Haier is a platform-based enterprise. It functions as a network platform that integrates the Internet

into everything.

https://corporate-rebels.com/haier-a-company-worth-studying/

Strong focus is on building platforms that match users with suppliers. Example: Food delivery platforms.

https://www.goodreads.com/review/show/3397074094 Page 123.

Question # 5

What are contracts?

The independent microenterprises create contracts with

other enterprises to deliver products and services.

https://youtu.be/AhdjLXdxnFc

Haier has introduced internal market mechanisms to align the actions of all start-ups in the firm and introduced blockchain-

enabled contracts between them to formalize the coordination of the collective.

https://corporate-rebels.com/start-up-factory/

8 characteristics of an ecosystem microcommunity (EMC) contract 1. Designed to achieve effective incentives, constraints and coordination of businesses within an ecosystem microcommunity.

2. Designed to enable ecosystem microcommunities to supervise each other, collaborate under the common goal and to quickly meet user needs and realize user experience iteration.

3. Internet based.

4. Multi-party.

5. Value-adjusted.

6. Target system instead of key performance indicators.

7. Decentralized autonomous organization instead of vertical organization.

8. Value added sharing instead of fixed salary.

Participants in an ecosystem micro community (EMC) are connected through a variety of online and offline means - including social media, stores, and service providers.

Demands can be discovered dynamically, and a holistic ecosystem can dynamically be established contributing to adaptable, customized service solutions and products.

https://onthehorizon.substack.com/p/on-the-horizon-weekly-ecosystem-structure

The zero distance concept allows Haier to move its manufacturing from mass production to mass customization—also called “made-toorder” or "on-demand manufacturing.”

With mass customization, Haier aims to deliver products and services that are modified to satisfy each customer’s need or desire.

https://corporate-rebels.com/start-up-factory/

Haier’s network-structure makes it possible that resources flow

freely throughout the organization without blockages being caused by managers, silos, or job descriptions.

Each microenterprise can collaborate with any of the other microenterprises in the network and exchange resources in the process. https://corporate-rebels.com/thriving-during-the-covid-19-outbreak-the-story-of-chinese-u-vaccine/

Question # 6 How are products and services developed?

Every product or service is developed in the open.

For example, social media are used to ask users / potential users about their needs and invite them to share their ideas, solutions and feedback.

https://www.goodreads.com/review/show/3397074094 Page 131.

A new business can be created in 3 ways: 1. A person posts an idea on the Internet and asks others to help him or her develop a business model.

2. A platform leader asks for ideas to develop an idea into a business model.

3. At events held once a month across China, anyone can suggest ideas to platform leaders.

https://www.goodreads.com/review/show/3397074094 Page 135.

When a microenterprise spots an opportunity, it can

1. pitch the idea on the Haier internal platform and 2. launch a new microcommunity that focuses on developing, manufacturing and selling the new product or service.

https://youtu.be/AhdjLXdxnFc

To create a prototype, the microenterprise can ask other microenterprise for help for example  design the prototype.  engineer the prototype.

https://youtu.be/AhdjLXdxnFc

After testing the prototype and getting feedback, the microenterprise can other microenterprises to, for example  purchase relevant materials used to produce the product.  produce the product.  sell the product.  deliver the product.

https://youtu.be/AhdjLXdxnFc

When asked how Haier can accelerate its transformation, Zhang Ruimin, CEO of Haier, has this answer: Run more trials and replicate the most successful trials faster.

https://www.goodreads.com/review/show/3397074094 Page 139.

Through crowdfunding people and organizations can invest money in the new business.

https://youtu.be/f_tDoZbLKYw

Question # 7 How do entrepreneurs get paid?

Rewards differ for each work target. This allows an entrepreneur to find a target that fits his or her skills and a reward that fits his or her needs.

The entrepreneur decides himself / herself, if his or her needs are  for higher base income and lower profit sharing, or  lower base income and high profit sharing.

https://corporate-rebels.com/no-more-ass-kissing/

People, who work for Haier in China, receive 1. a lower basic income and 2. a bonus is based on their individual performance and the performance of the microenterprise they work for.

https://corporate-rebels.com/an-american-icon-being-acquired-by-a-chinese-giant-the-story-of-gea/

People, who work for GE Appliances, are paid 1. a basic income and 2. a bonus. The bonus is based 50% on performance of the overall business and 50% on the performance of the microenterprise, people work for.

https://corporate-rebels.com/an-american-icon-being-acquired-by-a-chinese-giant-the-story-of-gea/

When the sales and earnings growth of a microenterprise exceed a base target, team members get a bonus proportionate to the amount the base target was exceeded.

When a microenterprise does not hit its base target three months in a row, a leadership election is automatically triggered.

https://www.goodreads.com/review/show/3397074094 Page 137.

People can invest in microenterprises. A microenterprise

pays dividends when the business meets certain targets.

https://youtu.be/f_tDoZbLKYw Minute 6.

Question # 8 What financial statements are used?

Each microenterprise and each platform has its own profit and loss statement.

https://corporate-rebels.com/break-down-internal-monopolies/

4 financial statements: 1. Profit and loss statement.

2. Balance sheet.

3. Cash flow statement.

4. Win-win value based statement – including, for example, information about co-creation work with others.

Other sources of inspiration https://fortune.com/2020/11/21/capitalism-entrepreneurship-economic-inequality-us-bureaucracy/ https://hackmyorg.humanocracy.com/ Marshall W. Meyer: Haier’s Internet of Clothing. Part A and B. https://www.sbs.ox.ac.uk/sites/default/files/2020-09/IoT%20Ecosystem%20Brand%20White%20Paper_0.pdf https://youtu.be/f_tDoZbLKYw