What is Rendanheyi?

Teamwork and organization image - What is rendanheyi?

MAQE’s core mission is to literally change how the world works. It’s an, admittedly, ambitious vision.

But what does it really mean in practice?

Part of achieving our vision of changing how the world works is looking forward and innovating. But innovation takes a lot of hard work. And any journey of innovation needs one thing to get started; Inspiration.

When MAQE took a look at Haier and how Haier innovates, inspiration struck. Haier’s revolutionary Rendanheyi organizational model has produced some astounding results. It’s a model that empowers staff and gives them more freedom and autonomy. This seamlessly fits in with MAQE’s existing beliefs. 

Which is why we announced our intention to implement the model a few days ago.

But what is Rendanheyi?

In this post we’re going to take a broad look at what Rendanheyi is, how it can work and some of the success that the model has had for Haier.

The Haier Directors building - what is rendanheyi?

What is Rendanheyi?

If we are talking a literal definition then “Ren” refers to each employee. “Dan” refers to the needs of each individual user and “HeYi” refers to the connection that exists between each employee and the needs of the user.

The Rendanheyi model, developed and implemented by Haier CEO Zhang Ruimin, is revolutionary. No other company operates in this way, at this scale. 

Rendanheyi puts the needs of the user first. One of the core components of the model is the phrase “zero distance to the user”. Employees need to face the user, provide value to the user and keep them at the forefront at all times. Without users, there are no employees.

Another core component of the model is “everyone is an entrepreneur”. This gives an extraordinary amount of freedom and control to employees. It democratizes decision making, going from a traditional pyramid structure to a flat structure. Small microenterprises have full autonomy in making decisions. Including overall strategy, hiring and remuneration decisions.

For more information on Haier and Rendanheyi, watch this video.

Has Rendanehyi been successful?

The Rendanheyi model has helped power Haier’s success. And the numbers continue to be impressive.

Haier’s revenue increased by 9.05% year-on-year in 2019, reaching RMB 200.62 billion (approximately $3.09 billion). During Q1 2020, the beginning of the coronavirus pandemic, it still achieved revenues of RMB 43.141 billion with a RMB 1.07 billion in profit.

Even in challenging times the company has achieved incredible success. Haier consistently exceeds industry averages, having an organizational model that embraces innovation and ownership makes that success possible.

So it’s safe to say that Haier is doing something right!

Person going to work - what is rendanheyi?
Photo by Marten Bjork on Unsplash

How Rendanheyi works

We have previously had the privilege of attending a webinar with Gary Hamel. He talked in depth about how bureaucracy is the enemy of innovation. He also talked about how many organizations are wasteful and lack ambition.

Rendanheyi is the opposite of wasteful. And it encourages ambition in employees. While implementing Rendanheyi represents a radical change for most companies, the profit numbers above speak for themselves. 

Working in a flat structure has many productivity and communication benefits. Employees have more ownership over the microenterprises they work in. And the teams within each microenterprise can easily communicate, without the need for management supervision that you’d see in more typical management structures.

But change is tricky. Staff have to buy into change and a radical model such as this needs to be very carefully integrated into most businesses. Some companies may already possess some of the values of Rendanheyi already, but many organizations will need strategic advice to get Rendanheyi to work for them.

Contact us via hello@maqe.com.

How MAQE can help

If you have any questions about MAQE’s transition towards the Rendanheyi model, what the model actually is and if you’d like to try implementing change in your own business talk to us via [email protected].