Re-engineering uncertainty: Reflections from the Rendanheyi Boundaryless Network Opentalk 2020
or: What can an organization like UNDP learn from Haier?
We know that some organizations are navigating uncertainty better than others. Some organizations are agile and adaptable, while others are static and inflexible. Haier, the largest global producer of consumer appliances, has not only continuously illustrated its agility during the past 20 years but has also been more successful in navigating the Covid-19 crisis than any other large global business conglomerate, including Google and Apple.
The organizational model that constitutes the basis for Haier’s agility is called RenDanHeyi[1] — in a direct quote from Haider CEO Zhang Ruimin,
“with the RenDanHeYi model we truly enter the network age. But the network aspect is not even the most important. What is more important is that we no longer try to delegate to, or ‘empower’, employees. It’s now time for every employee to be his or her own boss.”[2]
Some of the key features of this rather complex model are:[3]
- Every employee is an entrepreneur participating in micro-enterprises winning or losing according to their success
- Micro-enterprises — Haier currently consists of approximately 4000 MEs — make their own resource decisions, hire staff, and decide on products
- Micro enterprises organically organize in ecosystems with a common purpose, temporarily bound by a contract, and collaborate through technology-enabled platforms.
- Ecosystems and microenterprises co-create products with customers, practicing zero-distance
What can a large intergovernmental organization spearheading global development learn from Haier and its RenDanHeyi model?
Is it really possible to meaningfully apply lessons from an international business conglomeration to an international governmental organisation? These were the questions I had in mind when attending the Rendanheyi Boundaryless Network Opentalk 2020 last week. The forum’s sub-title “An Ecosystem of Co-creation and Sharing Based on the Principle of Human Value First” sounded promising.[4]
What I did not expect was the frequent reference to quantum physics principles to explain the model and its relevance in today’s world of growing uncertainty. I found that intriguing and I’ll organize my key take-aways accordingly. I am afraid it is a collection of questions rather than answers. Take it — perhaps — as a discussion starter.
The higgs boson of organizations — the enterprising employee.
In Haier’s model, the employee is an entrepreneur “with infinite possibilities” who is voluntarily taking part in microenterprises (ME). S/he bids to participate and, once on board, wins and loses with the ME. Her salary is made up of a guaranteed basic income, but the bulk is made with the success of the enterprise. As such, the empowered, self-learning and self-creating employee who is constantly regenerating the production (value generation) process is seen as the Higgs Boson of organizations, the particle that gives all matter its mass, that is at the origin of value creation of organizations. This corresponds with the finding that there is a strong correlation between successful people management and the success of organizations, empowering people to focus on what they are best at.
This seems to make good sense and is not surprising per se. The key question I am left with is how staff of public intergovernmental organizations can be encouraged to become self-driven employees. It will likely require changes to our hierarchical model, to our approach to leadership, to learning and to “self-creation”. I am not convinced though that UNDP needs a monetary incentive model. The opportunity to increase one’s purpose through more meaningful engagement, however, would make in my view a huge difference.
Waves of collaboration — Ecosystems of microenterprises.
Microenterprises (MEs), formed voluntarily by employees, have the right to hire, make resource decisions and to design their own products. Haier distinguishes between “experience MEs” who offer customer experiences and “solutions MEs” who design solutions to specific problems. Together, a number of these experience and solutions MEs temporarily connect in ecosystems in order to identify, design and produce solutions for customer problems or needs. They engage through a contract, a process also delegated and secured through the use of blockchain.[5] A key premise of the microenterprises is that decision-making is decentralized to the level the directly engages with customers, and that this level has full access to available information.
My sense is that part of UNDP’s success has always been its decentralized business model with delegated decision-making and its flexibility to grow, shrink and adapt; where Country Offices resemble ecosystems and project teams correspond to microenterprises. A key difference with the Haier model remains the relatively static structure of these offices and their raison d’etre: an ecosystem exists to co-create a holistic solution to a problem or need. Country offices exist …. because! Is it conceivable that regional hubs and COs evolve into solution nods that enable microenterprises in the temporary creation of ecosystems?
Uncertainty — “uncharted black water”, or black matter for that matter.
In the discussion, the “uncharted black waters” paradigm was used to illustrate that despite all planning and trends monitoring, organizations cannot predict future developments, both in terms of external context and in terms of value creation outcomes. In complex and chaotic contexts, it is impossible to identify all underlying factors and predict cause-effect relationships. Black waters, so the paradigm goes, require constant adaptation and experimentation.
The concept is in my view a solid evolution of the blue ocean paradigm and aligns well with the assumptions guiding UNDP’s current work on agile teams and adaptive management. Bringing together partners (donors, individual beneficiaries, governments, NGOs) into one solution-oriented ecosystem that continuously co-creates and adapts solutions for various customer scenarios will be a fascinating experience, and I can hardly see anybody better positioned to do this than UNDP. It will require us, however, to become consistent and integrate experimentation and learning as part and parcel of programme design and implementation. For real this time.
Entanglement — Zero distance to customers.
The importance of customer focus for agility has been underlined time and again during the discussions. Zero distance practically means to be in constant exchange and connection with the customer and to co-create solutions. The Internet of Things (IoT) provides the technology for organizations to make this happen — it provides constant entanglement and co-creation opportunities. Organizations need to be IoT-ready and turn this entanglement to their advantage.
The “zero distance” message seems clear: Globally operating development organizations need to increase their IoT readiness through the establishment and use of technology for continuous information exchange with beneficiaries and for co-creating and managing solutions. Secondly, organizations need to institutionalize continuous feedback loops with partners.
In reality, things are as always more complicated when operating in highly sensitive, fragile environments. But hey, that’s what we are good at. I, for one, am convinced that many of the written and unwritten practices to engage with governments, conflict parties, communities and individual beneficiaries which exist today have evolved over decades in the attempt find the right balance between customer exchange and principled action. Where to improve, where to course-correct? While it’s not the panacea to the customer conundrum, my sense is that the systematic establishment of regular sense-making and feedback loops accompanying our programmes beyond annual project and programme boards would go a long way. This partially needs to be done face-to-face, and partially be technology-enabled.
RenDanHeyi discussants agreed that 21st century management of organizations requires to move from hierarchies to networks, from bureaucracies to self-organising teams. Examples such as the application of the RenDanHeyi model in Fujitsu Europe, however, have also highlighted the criticality of support from a central team or platform to the eco-systems and self-organizing teams. There is an opportunity for massive reduction of overhead costs through clustering of “genuine”, i.e. functioning, support services.
Public international administrations are today the last bastion of bureaucracy, and that is no coincidence. After all bureaucracies were invented to ensure the standardized and systematic implementation of principles across at times uncharted territories. My sense is that a move of an intergovernmental development organization towards a self-adjusting ecosystem — as tempting as it is — needs to find the right balance between agility, on the one hand, and principled guidance and support on the other.
It will also require a shift in leadership, away from the authoritative “Dieu Père” Resident Representative — as one of my organizational mentors once described the typical RR of the 1990ths. Rather, it requires an enabling, humble and facilitating orientation with sufficient inner strength to encourage enterprising project teams and ecosystematic programmes to self-create and experiment. And to own it nevertheless, fully.
At the end of the 3 days, I felt that these reflections are not particularly surprising. I did, however, arrive at one satisfying conclusion: applying quantum physics to organizational design and — by extension — to UNDP allows to create meaning: While we cannot predict the future or, as it were, development outcomes, we can shape them through our experimental engagement. This opportunity for us to re-engineer uncertainty, I feel, should in future guide our internal discussion.
[1] “Ren” refers to each employee, “Dan” refers to the needs of each user, and “Heyi” refers to the connection between each employee and the needs of each user.
[2] Quote cited from: https://corporate-rebels.com/rendanheyi-forum/. Accessed: 21 September 2020.
[3] For a good description of the model, please see also: https://stories.platformdesigntoolkit.com/an-entrepreneurial-ecosystem-enabling-organization-c35eaf5acd9c.
[4] For details on the OpenTalk 2020, please see: https://opentalk2020.rendanheyi.com/?rendanheyi=china.
[5] One example of such an ecosystem is the “Internet of Food” ecosystem in which a number of cooperating microenterprises provide holistic and customizable solutions to food purchasing & delivery, storage (Haier fridge), preparation (Haier appliances), and consumption (customized recipes and dietary advice).
Joerg Kuhnel is an independent expert on organizational design for international development cooperation. His interest in complex and volatile settings comes from over 15 years of experience in Congo, Somalia, Sudan, Libya, Djibouti, Nigeria as well as crisis response assignments in Haiti, Nepal and Northern Nigeria. He is currently supporting the UNDP with the introduction of adaptive management practices in crisis settings. You can connect with him on twitter. Medium and LinkedIn.
