“I think every business needs to ask a single critical question,
“If I am the ideal customer why should I purchase from you, rather than any of your competitors?” –Dr. Flint McGlaughlin
American culture and global culture
In American culture, innovation, freedom and independence are core values we hold dear and near. But these values are human, not just American. As business is increasingly done on a global stage, corporate cultures across the globe are seeking to translate these values into consistent action – and financial value – while being more efficient and effective in serving customers and making money.
Corporate leaders: conductors of the corporate culture symphony
It’s not easy to tap corporate culture to do this – to weave a tight, strong web in which 1000 or 100,000 people act with passion and common purpose. If you are a CEO, President, or leader – YOU have the passion and purpose, that goes without saying. But getting everyone else to share it and march to the tune of your song is the real challenge – that’s the work of “building corporate culture.” The good news is, there is a “score” for creating that song into a symphony that can stand the test of time and create your legacy.
Innovation leadership from China
Today I want to celebrate and share an example of this from another part of the world – a brilliant illustration of how the spirit of “innovation, freedom and independence” is gaining a foothold across our global economy: China’s Haier Group. Be honest – manufacturing cold boxes is kind of an un-sexy business. So amidst China’s version of an industrial revolution, how do you get people passionate about that purpose, to build a vision that transcends “sweat factory” status to building a global brand with revenue of $20 billion and enviable profitability?
In 1984, Zhang Ruimin was promoted to run the refrigerator plant in Quingdao Refrigerator Factory. He learned quickly the refrigerators produced there were of very poor quality. So how do you get people to care, to change that? He shows up one day with sledgehammers and instructs the plant employees to destroy 76 defective units pulled from the shelves. “We’re not accepting poor quality” wasn’t a lecture from a Powerpoint pulpit. Zhang organized a memorable demonstration of passion.
Wonder what the dinner conversations were like in those employee’s household that night?
And that was just the beginning. In the years between then and now, Zhang has organized and built a culture across this 4100 person company that can deliver efficient mass production, AND meet the challenging demands of retail customers (including giant Walmart) faster than any competitor.
How did he do it? A few nuggets:
Corporate culture wisdom play at Haier Group:
- Organize around the customer. The company is organized into units devoted to a customer or group of customers.
- Build a brand. That’s how you ignite passion out of making cold storage boxes. Haier is iconic in China, and gaining recognition steadily in the U.S. They make washing machines, air conditioners and stoves too – capturing the expansive power of brand-building.
- Put managers in their place. Managers are resource-enablers, not decision makers. The unit members who work directly with customers make ALL the decisions. Managers are there to help ensure the unit gets what it needs. If unit members don’t like how their manager is performing, they vote him out.
- Structure for freedom with responsibility. Zhang reorganized the company into self-managed units with decision responsibility as described above.
- Measure what counts and make it visible. Every unit is evaluated and rewarded based on their own P&L. They count cash not orders. They charge capital to units who carry inventory. They post daily evaluations of employees publicly.
The story goes on to marvel at Zhang’s innovative approach to developing the corporate and it’s culture, and wonder about what drives him still, at age 62.
The answer was my favorite part of the story as it so brilliantly illustrates the truth about greatness in any endeavor, fueling a transformation from Red Guard and municipal bureaucrat to champion of capitalism. This is what has caused China’s unstoppable rise and made it the world’s 2nd largest economy:
“He’s still hungry.”
Lisa Jackson and Gerry Schmidt are corporate culture experts, helping companies improve performance through sensible methods of changing company culture, and aligning their culture with unprecedented change and transformation.
*This story originally appeared as an opinion piece in Fortune magazine, “The Next Management Icon” by Geoff Colvin, July 25, 2011.