How Rendanheyi Empowers Fujitsu West Europe to Rejuvenate, One ME Tripled its Orders during the Covid-19 Pandemic!
Fujitsu Group is a Japanese multinational with an 80-year history since its inception. Its management model is deeply influenced by traditional Japanese culture, with a strict hierarchical, bureaucratic system and a focus on risk aversion and stable development. However, in today’s digital era, the conservative bureaucratic management model cannot adapt to the changing market dynamics and customer needs, and the pace of developing new areas of business is gradually slowing down, so the head of Fujitsu Western Europe, João Domingo, applied to the headquarter in 2020 to implement the latest Rendanheyi management model on a pilot basis in the division to digitize the company’s business. In April of the same year, Fujitsu Europe began to adopt the ME approach, dividing the company’s new business units into 14 MEs. One year later, the performance seemed to be greatly improved — the orders of the ME in Spain grew threefold; none of the MEs lost money during the pandemic; and the employee engagement was leading the industry. The Fujitsu Europe pilot created a buzz across the entire Fujitsu Group, a Fortune 500 company, and regions within the Group rushed to study and deploy the Rendanheyi model — a great case of management methods of Chinese companies being adopted by their foreign counterparts.
I. First Encounter with Rendanheyi, Firmed João’s Determination to Transform
João said that before applying the Rendanheyi model, the company was run in the traditional, typical Japanese Fujitsu way, focusing on the two major businesses of network security and digitization. However, the development of new business in the IT market had been a bottleneck for the team. The cumbersome and complicated reporting system made the company unable to solve frequent new problems for customers in a timely and effective manner, so the team had no time to attend to the new business areas. In this regard, he contacted Corporate Rebels (the organization that co- founded the Rendanheyi Research Center in Singapore), which is dedicated to innovative management, and learned that the latest Rendanheyi management model might be a good remedy to help the company out of its predicament. However, since the core elements of the Rendanheyi approach, such as empowering employees and breaking down bureaucracy, were contrary to Japanese corporate culture, João was concerned whether the headquarter would allow such a practice.
After some thorough investigation and analysis, what made. João really make up his mind to adopt the model was the speech by Mr. Zhang Ruimin, Chairman of the Board of Directors and CEO of Haier Group, at Global Peter Drucker Forum in Vienna in 2019. Chairman Zhang mentioned that the model empowered a start-up to emerge as a 1-billion-USD unicorn in only six months. Fujitsu was incredibly inefficient in its operation and when a “potential French client approached the company for a consultant with specific expertise, it took the company nearly six months to identify one despite this very simple and clear requirement”, because the salespeople had to follow a rigorous bureaucratic process: explaining the opportunity, getting approval, recruiting and hiring from scratch, etc. The result, predictably, was that after six months the client’s response was, “No need. Your competitor has already helped us out.” João was so shocked hearing it that he became determined to propose to head office to try out the Rendanheyi model in its Western Europe division.
Fujitsu Japan head office was very excited about this, and approved. João ‘s proposal after a deep dive into the model. Back to now, João o is satisfied with the model’s implementation in the Western Europe division, and mentioned that at the recent group debriefing meeting, the Japanese headquarter used their experiment in the past year as a case for organizational innovation, and other regional divisions in Europe were all excited to get more details and wanted to bring this model to their own organizations.
II. Customized Salad-Style Management Model to Overcome Obstacles from All Sides
João emphasized the three most critical stages when it comes to deploying the Rendanheyi model as a reference for other transforming companies in the future:
1. The Mindset-Shift Stage:
1) Ensure employees understand the reasons for transformation and proactively find solutions to problems
From the bottom up, each employee must clearly understand the reasons for the company’s decision to transform, which are to encourage employees and customers to interact with each other, and identify and solve customer pain points, even if the managers are not on the same page. Granted, the managers can provide alternatives and the cases of other ME solutions, but the decision-making power is still in the MEs;
2) Create a corporate culture that encourages MEs to innovate
Create an authentic and safe culture that protects employees and ensures that they are not afraid of failure. João highlighted the importance of communication, “you need to tell people that this is an experiment, part of the solution to a problem, and that we will always be with them, instilling a belief that they should not fear failure. Financial incentives are also useful, but it is especially critical to create a culture that encourages innovation and bold experimentation”.
3) Communicate with finance to establish a new KPI with the goal of achieving win-win results and adding value
Mr. Domingo, who has many years of experience in financial management, is well versed in the fact that the finance department always focuses on the short-term interests of the company. He shared an example of how he communicated with the finance department as a reference: ‘Last year’s business performance of the company was outstanding and managers wanted to expand the sales team with one more person, but from the finance department’s point of view, which is all about this year’s profit and loss, this team expansion shouldn’t be allowed. This is obviously contrary to the long-term development goal of the company. So I would communicate with the CFO to explain that this is investment for the future, but before that, I would communicate with the directors of all departments to make everyone share the same view’.
2. The Organizational Establishment Stage:
Honoring Haier’s esteemed salad-style culture system, João did not turned Fujitsu Western Europe into a 100% Rendanheyi operation, but only first piloted the transformation in the most important business units, namely the sales and delivery teams, into 14 MEs that were given the responsibility for developing brand-new areas of business and promoting traditional business in a new way, while retaining functional departments such as HR and finance, in order to relieve the concerns about the risks of transformation the headquarter had and ensure the smooth running of the entire process. In addition to this, João searched for the most enterprising entrepreneurs in each ME that could become ME owners, so that the whole team could advance the new tasks more actively.
However, it is predictable that the transformation process will have roadblocks from all sides of the company. In Europe and the United States, transformation means layoffs, and middle managers of Fujitsu Western Europe were on their guard. Rendanheyi encourages MEs to make their own decisions and be responsible for their own profits and losses, but the middle managers were used to the traditional way of working where they make decisions by the book and are not held accountable for failures. It is worth mentioning that the new hires and newly promoted managers have been quite receptive to Rendanheyi and they are more willing to have the right to make decisions and more courageous to take on responsibilities.
3. The Experience Expansion Stage Where the Role of Managers is Transformed:
The role of managers has also changed from decision-making supervision to providing service support. Weekly regular meetings have turned into a forum where MEs share best practices, discuss how to solve problems together, learn from each other, and exchange resources to deliver win-win results. Fujitsu also introduced a team dedicated to coaching MEs. So if they encounter obstacles in other departments, the coaching team will help them out. For example, if they need to access some content, the coaching team will give them the green light. At the same time, managers also need to set some bottom lines for MEs that must not be changed. For example, MEs cannot take the liberty of changing the color of the brand image or the company’s values. Basically, no MEs will object to these bottom lines.
João shared a very telling story. An ME went to a new market to acquire customers. They tried to do things that Fujitsu had never set foot in, such as artificial intelligence, blockchain, data analytics, etc. But most members of the ME did not have the skills or abilities in these areas. So the team members needed to work closely together to develop, sell, and deliver these new services and products. In addition, the ME also needed to decide on their own which types of customers they wanted to win over. He said, ‘Some people decided to find some big customers, and others wanted to target small customers. For our business, these choices all are very important. I also have some thoughts on this. Some MEs want to do things I don’t dare to do, but even if I hold different opinions, I have to let them try to succeed or fail on their own. I have to remain silent. I can only provide a different perspective, but I cannot impose my own views on them. Yes, as a leader, it’s not easy, and it takes courage to remain silent’. But it’s not just Seretti and Domingo who handed over power. They also needed to persuade all department leaders to delegate power, even if there was much resistance. Seretti and Domingo believed they needed to lead by example, and that they could make others in the organization talk enthusiastically about this journey and the achievements created by MEs.
III. Breakout Success to Lead the Take-off
What Rendanheyi has really changed about Fujitsu’s business in Western Europe is that, compared with the past, customer resources are no longer in the hands of a few salespeople. MEs have the right to take the initiative to directly connect with customers and seize new opportunities, capture customer pain points within a short period of time, and track down expert entrepreneurs and support them to spontaneously form an EMC to propose solutions and implement them. There is no need to report to any of the middle managers, but every day the team members get together to communicate and brainstorm with new sparks. João was very pleased to share with us four sets of data that prove that after Fujitsu Western Europe deployed the Rendanheyi model, it has realized the great status quo in which customers, employees and companies co-create for win-win results:
1) The company conducts two employee engagement surveys every year. In 2019, the employee engagement score was 64 and the latest survey showed it at 73. It is worth noting that the highest score in the industry is 74. It can be seen that after the implementation of the Rendanheyi model, employee engagement has increased from a moderate level to almost the highest level;
2) The company’s annual customer feedback survey results showed a huge change. Previously, the negative opinions of customers for newly developed business areas were more than positive opinions. However, the proportion was reversed after one year, and customers’ feedback on new business areas was more positive with negative comments changing to neutral comments, and neutral ones to positive ones. The latest survey almost has zero negative comments;
3) From the perspective of financial indicators, the business volume of the ME responsible for digital transformation in Spain has increased by 300% during the year; another large investment — the cloud ME has expanded from the original team of 5 consultants to 26 consultants, another important indicator of business growth;
4) The most important thing is that none of the 14 ME teams has seen a decline or loss in business volume, and the worst case is remaining flat, which is really exciting. And most of them are developing new businesses, and it is even more difficult to turn a profit in a turbulent first year. It is worth mentioning that in 2020, the whole world took a hit from the Covid-19 pandemic. These ME teams were all established online, spanning 6 countries, and have not met each other. João firmly believes that once the pandemic passes, they will definitely create even greater energy when they can get together.
IV. Looking Forward to the Future, the Beauty of Rendanheyi Lies in Accepting its Continuous Evolution.
João is convinced that Rendanheyi now is the cure for the digital transformation of traditional companies, because everything is changing in the current VUCA era. All companies are undergoing a journey where they need to transform and evolve, and so does the Rendanheyi model. But what he likes most about MEs and Rendanheyi is that they change with the times and both accept that they need to be constantly evolving. Fujitsu Western Europe is a case of choosing the Rendanheyi model to help its successful digital transformation, regardless of the country and cultural background. The functionality and universality of Rendanheyi and ME are obvious to all, and are universally applicable.
Please find more about Rendanheyi model at: rendanheyi.com
