• Terry White

Don't break the rules - Cut them out!

In 1984 Zhang Ruimin, CEO of Haier, was faced with rescuing the company. His first action was to invite all employees to cut existing rules they felt were unneeded or holding them back. Only 13 rules survived.

Haier went on to become the number one brand globally in major appliances for 10 consecutive years from 2009–2018.

Zhang made many changes over the years and the company has evolved to become an ecosystem of micro-communities with over 90 000 "employees." They don't consider themselves employees, they are self-employed entrepreneurs - every one of them.

Quite something from cutting a few rules!

But of course, the "rules" were a symbol for top-down, command and control structures. Zhang is also famous for gathering employees together to destroy 76 refrigerators to raise quality awareness among workers in the face of consumer complaints. At the time, even if they were not working properly, each fridge was worth about two years' wages. This is what Zhang calls "visual management," as was the rule-cutting exercise. Both were about the messages: "What should we stop doing so you can succeed?" and "It's about the customers and what they need."

So here's the question: If your staff could cut the rules which hold them and the company back, how many rules would go?

But more importantly, would the executive team allow them to do so?

I thought not.

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