Haier is good at it, why aren’t we?

In the article, Your Strategy Needs a Strategy, the authors briefly discusses the Chinese home-appliance company, Haier. Haier’s strategy is flexible to the extreme, allowing each “minicompany” within the organization to run itself, providing no support if they do not create profit. The article continues on to discuss Haier going nearly bankrupt but turning it around to lead the international home-appliance industry. After reading, Building Your Company’s Vision, it was clear to me Haier was able to turn itself around because it rallied behind a vision.

Building Your Company’s Vision defines two components of a company’s “core ideology”, core values and core purpose. Haier established its core values and CEO Zhang Ruimin focused his company on a core purpose (available at http://www.haier.net/en/about_haier/culture/) and a dedication to the core ideology can be accredited with saving the company. This is not ground breaking, and is more proof the arguments laid out in Building Your Company’s Vision; but what if there wasn’t a strong, consistent leader at the head of an organization? What if the core ideologies of each “minicompany” shifted just as regularly as the leadership? Can that organization survive?

                A company organized this way and operating with little continuity would be an outright failure. An organization, such as large government departments or the branches of the military can continue on, because they have to. Working within one of these organizations for over five years I can confirm they are indeed hectic. Though an overarching hierarchical structure exists, as you move down the chain each operating department acts as its own “minicompany”, developing strategy to achieve results. Haier has shown this can work well, even in the corporate world, but what Haier has is continuity.

Particularly in the military, every single member of each “minicompany” will be rotated out within two to five years. This causes priorities to shift with each rotation, particularly when leadership changes. When leadership is replaced, a new core ideology is implemented. Eventually, each member is required to know and adhere to three or four different sets of core ideologies. This effectively weakens the vision (or visions) into just another set of workplace cliché’s.

Obviously, government organizations don’t need to make a profit, but profit is not the end goal discussed in Building Your Company’s Vision. The point of establishing vision is to attract and retain the talented people you want in your organization, thus success will follow. Here is where the impact lies, without a strong (and singular!) vision, most members of an organization will quickly de-motivate to a level of maintaining the status quo and those not concerned with job security or a steadfast dedication to a career will move on. All organizations need to adopt this mindset, no matter how large or essential.

(For more on how Haier continues to reinvent itself around its visions and the strategies it has employed, check out: Haier Road to Growth, https://www.strategy-business.com/article/00323?gko=c8c2a)