RenDanHeYi Versus the Silicon Valley Model

This chapter further explores Haier’s RenDanHeYi management model by comparing it to the author’s previously described Silicon Valley Model as practiced at Google. The two models share many underlying principles and both, apparently, have worked well for their companies, as evidenced by the continuing rapid growth of both Haier and Google. One possible conclusion is that the models embody a set of “meta-principles” useful for any company in today’s world. Looking at application of the principles, however, RenDanHeYi appears to be more “disruptive” than Google’s model in several respects. The RenDanHeYi approach creates a more expansive and networked ecosystem for co-creation. RenDanHeYi flattens the management hierarchy more thoroughly, gives employees and teams (“microenterprises”) more autonomy, and encourages entrepreneurial activity more extensively. Compensation is more directly tied to value creation with RenDanHeYi’s “pay-by-user” model. Interaction with and involvement of customers/users is more frequent and intensive in RenDanHeYi’s “zero distance” philosophy, and there is more focus on creating lifetime users, who can become partners in a networked enterprise.