Recently, the QLC team held an International Management Symposium , which brought together esteemed speakers from Japan and the U.S. to discuss the topic of How Japanese Corporates May Succeed In The Next Phase Of Development As The Knowledge Economy Advances To The Next Stage. The event has attracted many participants from highly respected companies in Japan.
During the discussion, the speakers noted that the Japanese economy had lost momentum in the last 30 years, and the global presence of Japanese companies continued to recede. At the same time, the world is entering a new Knowledge-Based Economy, accelerated by recent technological advancement in AI and IOT. The big question is whether Japan can seize the opportunity to resurface and shine in the coming new era.
The speakers agreed that at the core of the solution is PEOPLE. Leaders of companies in Japan (and elsewhere) need to create a platform where a free set of individuals can come united by a clear vision and goal, but are only softly aggregated, to be able to pursue diverse activities without interference, and in the process, develop new innovations and opportunities.
Mr. Du from Haier Japan offered interesting insights to how such a model was implemented by his organization to achieve success in Japan. The name of the model is RenDanHeYi: “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 customers. The employees are measured by the value they create for the customers, as a result the system will be focused on innovating best user experience and in the process encouraging the employees to become entrepreneurs spontaneously, which in turn creates a self-expanding and self-evolving ecosystem that facilitates win-win for all.
According to Mr. Du, the initial introduction of Rendanheyi in Japan was met with great resistance and doubts, because the model challenged some of the fundamental traits that defined the success of Japanese corporates in the Golden Era. As an example, Mr. Du was unable to offer performance-based bonuses and career ladders to the teams initially because the mid-level executives strongly believed in seniority-based bonuses and tenure-based promotion process.
After almost half a year of discussion, a consensus was finally reached that compensations and promotions should be flexible and they should be based on individual contributions. This began a new era at the firm where incentives were redefined; starting with setting market and business objectives based on customer needs, which then were cascaded to personal/individual objectives. The result of this transformation has been impressive. By 2020, Haier Japan Region’s positioning in the premium white goods market in Japan improved considerably, with a number of high-profile launches of new products.
In the process of transformation, the Haier Japan team created various ‘Microenterprises’ to work directly with the customers and address their needs by continuously innovating new products and services. Among these, the case of the Microenterprise within the AQUA COIN LAUNDRY is particularly impressive. Several years ago, this Microenterprise identified a growing customer need to wash large-sized items such as curtains, sheets and quilts which were too heavy for home washing machines. The team raised JPY Ұ 500 million to accommodate this need by investing in building laundromats with commercial-grade washing and drying machines. Over the years, the AQUA Microenterprise has consistently refined and upgraded the machines with added functions that would allow customers to search nearby stores online, check the status of machines and make appointments online.
Today, AQUA is no longer just about washing machines, it has established an ecosystem of laundry scenarios with many cross-industry partners through its IoT cloud system. Some of the most high-profile collaborations include working with retail partners such as FamilyMart, Eneos, Muji and Hokkahokka Tei, to allow customers to do laundry and run errands / do shopping in a one-stop shop. These new scenarios not only generate higher traffic for the partners but also provide great convenience and value to the customers. Currently there are 3,500 stores across Japan with 43,000 connected AQUA equipment’s.
This system allows AQUA to not only provide smart washing machine as a hardware product, but also provide a platform to the entire business community. For example, one of Aqua’s partners originally needed to employ at least 200 people across its 200 stores. Since joining the the Aqua platform, the partner can now remotely monitor all the stores and machines in real time, and as a result employ fewer than 30 people for routine operations across 600 stores, therefore dramatically improving margins and efficiencies.
The implementation and success of RenDanHeYi in Japan (also China, United States and Europe) demonstrates how a company can use the power of collective intelligence or self -organization of its employees to overcome bureaucracy and achieve speedy innovations; and as a result, strengthen the bond with its customers and secure competitive advantages. It remains to be seen whether such models and principles can be embraced by more Japanese companies as they navigate their own organizational transformations in the new era of Knowledge Economy .