From the Business Roundtable in the US redefining the purpose of a corporation to more manufacturing and Internet giants jumping on the bandwagon of organizational transformation, the management logic for the Internet of Things (IoT) era is changing from shareholder comes first to human value maximization. The 5th Rendanheyi Model Leading Forum took place on September 17, 2021. This forum, which has been held for five consecutive years, connects global business leaders and management scholars for thought-provoking discussions on the changing organizational management model in the new era.
Edmund Phelps, Nobel laureate in economics, Gary Hamel, founder of the Management Lab (MLab), and Zhang Ruimin, Chairman and CEO of Haier Group, shared the stage to discuss how organizations can transform themselves with the principle of "human value comes first."
Throughout the first three industrial revolutions that preceded the IoT era, corporations were capital-driven and existed to maximize shareholder value. Edmund Phelps argued that "this overlooked people's innate desire and ability to create and reduced the dynamism in a nation or a company for growth."
The IoT is essentially a "network of people." Only by relying on the interconnectedness and value realization of individuals can a true IoT be built. The Rendanheyi model which Haier has been experimenting relentlessly in the last 16 years is precisely a new model for elevating economic persons to autonomous persons and for unlocking "human dynamism" to the fullest. According to Edmund Phelps, "Haier's model drives employees to innovate around user's needs, thus to ensure sustainable upward growth momentum at Haier."
Gary Hamel believes, "leaders around the world vastly underestimate the power of collective intelligence, of self organization, and of peer to peer networks." He argues that Haier, under the Rendanheyi model, is more like a stock exchange: a stock exchange provides a marketplace for listed companies to trade securities and it outperforms every company listed on it. Haier has thousands of MEs and thousands of supply nodes that are brought together by ecosystem micro-communities (EMCs). Anyone spotting a market opportunity can initiate an EMC to generate returns.
Rendanheyi is a new model of upgrading economic persons to autonomous persons. The EMC contract offers a new ecosystem that disrupts a bureaucratic organization to a self-organization. The ecosystem brand is a new paradigm of creating autonomous cycles of ecosystem value creation. These three mutually dependent and reinforcing elements make up ecosystem brand, a forward-looking new paradigm to adapt to the changes of the IoT era. CEO Zhang Ruimin believes that the driving force of drastic changes in the IoT era comes from user experience iteration, but no enterprise alone can dynamically create value to meet users' lifetime experiential needs.
As the Rendanheyi Model Forum proceeds, more enterprises have begun to appreciate the significance of management transformation over technology transformation. It is reported that ten Rendanheyi centers have been spontaneously set up around the world. More than 300,000 organizations in 74 countries and regions have registered as members of the Rendanheyi Alliance. One of the centers, the Rendanheyi Silicon Valley Center, sits right in the middle of Silicon Valley, the mecca of entrepreneurship. As Peter Drucker, the father of modern management, predicted, the current enterprise form will no longer survive by 2025; however, Haier has led in fulfilling this prophecy in the ecosystem future of "human value comes first." Through the alignment of value creation and value sharing, the Rendanheyi model has become the model of choice for the IoT era.