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"Davos" in management circle re-launched, Haier's "3E" system implemented

09-23 2018

"Davos" in management circle re-launched, Haier's "3E" system implemented

The analysis, observation, and prediction of the IoT have never stopped since it was introduced by Kevin Ashton at the end of the last century. Some people interpret the IoT as an extension of the Internet, while others hold the view that it is all about universal sensing. In fact, IoT means a holistic change in the economy and society, far more than just put sensors on everything. What should companies do in such an era?

On September 20th last year, the 1st International Rendanheyi Model Forum was held in Qingdao, creating a blue print for discussion on IoT management paradigm. The Rendanheyi Model is the business and management model that was initiated by Mr. Zhang Ruimin, Chairman of the Board of Directors and CEO, Haier Group.

Model leading - Chinese voice on the management stage in the world

During the past one year since the 1st International Rendanheyi Model Forum, this model has been recognized by more and more world authorities and experts, and is considered as the first disruptive management model since the fourth industrial revolution.

Those paying attention to the frontiers of management theory may find this popular Chinese pinyin in the Western management academic circle: "Ren dan he yi". As a transliterated word of Chinese characters"人单合一",  it has now become a general item in the English world. At the beginning of studying the Rendanheyi model, the Western world once tried to translate it into English; however, as a disruptive concept, it completely differs from classic management, and the translators found that it was difficult to express it in an accurate manner. Finally, considering that it was an original item introduced by Haier Group, they adopted transliteration; and it was also endorsed by many domestic and foreign experts. With wider spread and recognition of the Rendanheyi model, it has gradually become a general item. In 2018, the CCTV Spring Festival special program Chinese Characters in the English World made special report on this pinyin.

Due to the theoretical breakthroughs and practical results achieved by the Rendanheyi model, on March 7, 2018, Zhang Ruimin, Chairman of the Board of Directors and CEO, Haier Group, walked into Harvard University for the second time after 20 years, and lectured on the Rendanheyi Model. The Haier: A Chinese Enterprise Giant for Incubation Entrepreneur this year marks the third time that Harvard Business School has written the Rendanheyi exploration into its case library.

Practice implementation - Lead international standards and business model exploration

Haier's COSMOPlat is a practical result of the Rendanheyi model in the field of industrial Internet. Due to its nature of differentiation and leadership, Haier Group was approved to lead the establishment of international standards for mass customization models and industrial Internet platforms by three international standards organizations including the Institute of Electrical and Electronics Engineers (IEEE), the International Organization for Standardization (ISO), and the International Electro Technical Commission in December 2017, May 2018, and July 2018 respectively. For this, Haier Group has distinguished itself among enterprises in the United States, Germany, Japan and other countries. This is also the first international standard regarding manufacturing model led by Chinese enterprises, which indicates that the Chinese program has shifted from following to leading and taken the lead in the world.

Under the guidance of the Rendanheyi model, Haier changed the washing machine into a networked appliance from an electrical appliance; it is not only connected to the users, but is also connected with the clothing manufacturers through the RFID on the clothes; it carries out factor aggregation, resource integration and optimal allocation regarding the design data and consumption data of the washing machine, as well as the design and consumption data of fabrics, garments and detergents, and builds a connected ecosystem that integrates plants, stores, and homes covering fields of appliances, apparel, and laundry to achieve value growth for all.

In addition, by leveraging IoT technology, Haier has implemented a full-process solution for blood safety management; the General Electric Appliances (GEA) has achieved the best performance growth in the past 20 years through implementation of the Rendanheyi model.

"3E" System - Lead paradigm in the IoT Era

The "3E" System is the latest achievement in the exploration of IoT Paradigm; it consists of three parts, namely, the ecosystem, the ecological income, and the ecological brand. It is the implementation of the Rendanheyi model in enterprise development and management mode in the IoT era. There is a logical relationship featuring progressive optimization between the "3E". Among them, the ecosystem is a necessary condition, the ecological income is a sufficient condition, and the ecological brand is the goal. The "3E" System is in line with IoT era with community economy, sharing economy, and experience economy as characteristics. It has brought disruptive innovation to the classic management model, as well as a strategy to be followed by enterprises to enhance its core competitiveness in the IoT era.

Ecosystem refers to the interests and emotional community of value creation, sharing, and iteration formed by enterprises and stakeholders, as well as enterprises and users in the IoT era. It has subverted the competition relationship between enterprises, as well as the buyer-seller relationship between enterprises and users in traditional model, and realized the cooperation and symbiosis between enterprises, as well as enterprises and users.

Ecological income refers to the value sharing gained by the ecosystem through satisfying the user experience iteration. It breaks the zero-sum game under the traditional mode, realizes mutual benefits and win-win situation for all parties in the ecosystem; it subverts the law of diminishing returns under the traditional mode and realizes increase in marginal revenue.

The ecological brand is the recognition and pursuit of the ecosystem to meet the iterative ability of user experience. It is the embodiment of the comprehensive competitiveness of enterprises in the IoT era. Different from the product brands and platform brands which are confined to evaluation of products and their own development capabilities, it pays more attention to development potential of the enterprise in the future.

IoT era is at hand, and the wheel turns! In this high-level international forum under the theme of management paradigm changes in the IoT era, which is the first up to now, Haier Group took the lead in the exploration of the IoT-based management model and shared the results of implementation; there is no doubt that it will become a model for enterprises all over the world in terms of transformation and upgrading!

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