On November 10, at the Digital Workshop Day of the Drucker Forum on “Revitalizing a Mature European Organization: Haier Germany”, Thomas Wittling, Managing Director of Haier Germany, made a passionate presentation outlining their latest achievements.
- The fastest growing brand in the European market;
- Overall year-over-year growth of 60%+ in 2021, with strong growth of 12% in the share of the premium washing machine category;
- Sustained double-digit growth in Q3 2021 despite an industry downturn;
- Achieved annual budget goal in only 8 months.
Such impressive results piqued the interest of nearly 200 business school professors and global business executives in the virtual meeting room. As a background note, previously Haier did not stand out in the German market among many competitive home appliance brands. Professor Bill Fischer, Senior Lecturer, Sloan School of Management, MIT, directed the most frequently asked question in the chat room to Thomas: How was such a remarkable turnaround possible in just 2 years? How did Haier Germany do it?
Thomas answered, “The Rendanheyi model allowed us to always keep an entrepreneurial mindset. Everyone on the team wanted to achieve self-realization. People don’t want to be followers or be complacent with being a small part in a big company. We had a clear goal to become our own CEO and leave our own marks.” In 2000, Haier Germany piloted the value-added sharing mechanism in the Washing microenterprise (ME), where people set their own targets and value sharing ratio based on the levels of the targets. Since the implementation of the value-added sharing mechanism, the team has seen many changes. The budget target originally set for 12 months was achieved in only 8 months, and everyone received a share of the profit equivalent to 10% of their annual income according to the valuation adjustment mechanism. And this was not the whole story, as the Washing ME raised the target further to pursue a higher value-added sharing.
The Haier Germany team is on an adventure where its members are breaking the shackles of hierarchy in an open and equal entrepreneurial culture, and constantly taking on ambitious targets under the mechanism of autonomous decision and fair sharing. The team members are fully motivated because they are unlocking new business opportunities and space for value sharing, and they investing in a future for themselves.
From 0 to 1, becoming the first “Columbus” in Europe
Haier has been experimenting with the Rendanheyi model for more than a decade. The reputation of many of its success stories has extended overseas. Thomas, a veteran with 32 years of experience working for famous German and Korean brands in the home appliances industry, was fascinated by the model when he learned that the ME team has autonomy to set their own targets and the ratio of profit sharing upon completing the targets. In 2018, he joined Haier Germany and started his own entrepreneurial journey.
Thomas Wittling was drawn to the model where he did not need to passively execute orders from the top, but could make autonomous decisions and have a real shot of actually putting ideas into action. “I’m still in Germany. We are still making Haier products. But our mindset and mechanisms changed”, Thomas concluded.
It’s a well-known fact that 70% of the German market is dominated by local German brands, and foreign brands tend to be at a competitive disadvantage. This is where Thomas’ industry expertise made a difference. “Now I must become Germany’s №1 home appliances brand! Because, Haier has the DNA of being №1 in the world. I have confidence to achieve that in Germany! Being №1 in the market means creating more value and more value to share. We were all motivated.”
As a reflection of his entrepreneurial drive, Thomas had Haier №1 stickers all over his desk, mobile phone, car and computer. He passionately showed his DIY “Haier Germany №1” sticker in front of the camera for the audience (Pictured).
Ready the ship to attract capable sailors: the ME brought in top talent in Europe
After defining their ambitious targets, Haier Germany started strategizing how to achieve these targets. They needed first-class talent. As a pilot, Thomas decided to move a team of 14 from Bad Homburg to the more dynamic and competitive city of Munich.
At first, he thought the ambitious targets would turn people way, but soon after the relocation, a sales director from a competing brand offered to come onboard, who even raised the VAM target by an ambitious 10,000 units. Today Thomas leads a team of 70 people, 80% of whom joined freshly from outside. “They come from different cultural backgrounds, but I am sure that they all came for this open, decentralized entrepreneurial platform guided by the Rendanheyi model. Everyone is self-driven and full of vitality”, Thomas said proudly and assuredly.
Andreas Koppay was drawn by this unique and wonderful entrepreneurial culture. With decades of experience dealing with key accounts such as Casio in the e-commerce channel, he shared his story with unmistakable excitement.
‘Soon after I joined Haier Germany, I felt that it was very different from the large and mature European organizations I had worked for before. These companies all made top-down decisions, and their decision-making process was long and onerous, very bureaucratic. My experience with Haier was completely different. Here I saw ME teams had the autonomy to define the success of projects such as the Ipro7 series of washing machines. It’s a whole new experience to be in an ME team, quickly and jointly adapting strategies to the dynamically changing market circumstances. Receiving value-added sharing when achieving the target of the product team was a great incentive to improve everyone’s motivation and execution. Unlike the top-down decision-making approach I was used to, decisions here are not made from the top, but on the contrary involve all the interested parties. We share and work towards the same goal of making Haier the №1 home appliances brand in Germany. My takeaway is that if an organization cannot react agilely to changes in the market and adapt its strategy in time, it will lose business opportunities. I think Haier’s organizational structure is more effective, it gives me the power to make decisions and allows me to better navigate through market changes. It’s a game-changer for me and it keeps me motivated.’
The resilient ME made record sales despite the pandemic
Early in the COVID pandemic, Thomas’ team keenly anticipated the risk of supply shortage of bulk materials and finished products in the German market. In late February, before Germany enforced any lockdowns, Thomas led the sales director and key account managers to visit all e-commerce customers in person within a week, to warn them of the supply disruption risk and share Haier’s pandemic preparedness measures. His team also explained to customers the resumption of production activities in Chinese factories, and provided assurances of on-time delivery of products and marketing programs. During the pandemic, local German brands shut down their factories one after another without backup measures, while Haier’s proactive response impressed the channel customers. These customers were grateful for Haier’s timely alerts and support in fighting the challenges of COVID-19 and decided to deepen partnership with Haier.
The Amazon platform, for example, placed a block drop-ship order of 7,000 washing machines in February, which not only saved time and logistics costs, but also secured supply during the pandemic. The rapid spread of the pandemic forced many offline stores to shut down and some online channels were delivering only essential goods. Not only was Haier Germany fully prepared, it also secured priority fulfillment for big-ticket home appliances from Amazon. When other brands were busy making contingency plans or announcing stock depletions, Thomas’ team preemptively connected a parallel solution EMC in China to ensure the continuity of product supply.
Some users left comments saying “choosing Haier is choosing trust”. The retail sales of Ipro7 series have broken milestones and growing rapidly since May. During the Amazon Prime Day event in late June, Haier Germany made a record two-day sale of 2,000 units, making it the best-selling washing machine SKU on the Amazon channel.
Haier Germany’s “Columbus” sails again with wind
By August, the Washing ME already met its initial VAM target for the whole year and confirmed that its members would each receive value-added sharing equivalent of 10% of their annual income by December 2021. At the workshop, Thomas shared another exciting piece of news. His team had hit the stretch target of another 10,000 units as of today. That means the 10 members of the Washing ME will each receive value-added sharing equivalent of 20% of their annual income by December!
The success story of Haier Germany’s Washing ME is a strong proof-of-concept of the implementation of Rendanheyi in German companies. Thomas plans to further replicate this successful model in three other MEs — Cooling, SDA and CIB — as the next step.
The upgrade version of the Ipro7 washing machine, Ipro5, will become available in Europe in the coming months. It will be connected to Haier Europe’s hOn Smart Home experience platform to transform home appliances into networked appliances, which will provide users with end-to-end scenario-based smart home solutions. The value-added sharing will not only be attributable to Haier Germany ME members, but also every external ecosystem partner.
If Haier Germany is compared to the “Columbus” ship, the Rendanheyi model is the wind that sets this ship for sail. Haier Germany will use the “compass” of the Rendanheyi Scorecard to steer the ship to a brave new continent where an ecosystem of lush rainforest awaits.
