How Fujitsu Is Successfully Reinventing Its Way Of Working
Inspired by Haier's Rendanheyi Model, Fujitsu Europe started experimenting with the microenterprise concept in spring 2020. One year later, results look promising—employees are more engaged, customers more satisfied, and business results have skyrocketed. What can we learn from their story?
In our upcoming book about Haier we describe how Bruno Sirletti (VP Cloud & Digital Business Western Europe) and his colleague João Domingos (Vice President, Head of Western Europe) started this transition. Why did they do it? What did they do? How did it go?
In our book we write: "Fujitsu had always been a company that avoided risks and uncertainty but was now realising it was becoming too slow.
'At one point we had a French customer that wanted to work with us, and he was looking for a consultant with specific expertise' said Domingos. 'The assignment was pretty clear, but still it took us almost six months before we had one of our consultants ready to set up the services.'"
Why? The Fujitsu salesperson that received the customer request first went back to the company. There he needed to follow strict bureaucratic processes: explain the opportunity, receive official approval, start recruitment and hiring processes, etc.
It took the company six months to go through the entire process. When the salesperson went back to his customer to introduce the consultant with the required expertise, the customer responded; “Thanks, but no thanks. I asked you for this six months ago. I have someone else now, from your competitor.”
They were facing more challenges, Domingos said. "We also had a particular business issue that was troubling us, which was the difficulty of growing new areas in the IT market.
Our growth in areas like digital transformation and cybersecurity was very modest. We found that traditional ways of working made us too slow to market.”
Around that time, September 2019, Domingos visits the Drucker Forum in Vienna. Here he hears Haier CEO, Zhang Ruimin, talking about the Rendanheyi Model, and its microenterprise concept. Not much later, on the same stage, he hears one of Haier’s employees tell the story of how they had managed to grow their microenterprise from zero into an unicorn in half a year.
This is Domingos’ wakeup call. He realises Haier had launched a microenterprise and built it to be worth a billion dollars in the same time that Fujitsu needed to get one consultant working with one customer who approached them. “I'm definitely doing something wrong. But how do I change this?” he said to himself.
A few months later, Sirletti and Domingos contacted us. Things have moved quickly since then. In April 2020 they introduced the first microenterprises into their part of the company. Now, a year later, this number has grown to 14.
For those 14 microenterprises things look more than promising. Within a year they managed to boost employee engagement scores from 64% to 73% (74% is the industry benchmark for high performing companies). They flipped the customer NPS score from negative to positive.
The microenterprises also grew their businesses more rapidly, and none had a business decline. For example, one microenterprise has tripled business in the last year. Another grew from 5 to 25 full time members (without the new structure it would have been more like 6).
There are a few important steps they took along their journey.
1. Start small
They started their experiment small. Fujitsu allowed Sirletti and Domingos to test the concept of microenterprises in six countries around Western Europe to see if it would be fit for purpose and work inside their company.
They started with only a few microenterprises in the sales and delivery departments. “We took about a hundred people outside the organisation and enabled them to develop the new businesses.” said Sirletti.
“The people were organised into small microenterprises and participants were not selected on hard skills alone. We found people who also had entrepreneurial and leadership skills.”
The microenterprises were then freed from the existing bureaucratic monsters inside the company. They appointed microenterprise leaders and granted them the freedom to self-organize.
The microenterprises could now decide for themselves which markets to target, and could hire employees or consultants. Employees could approve deals directly while meeting with customers. All without going through existing bureaucratic processes.
Within the microenterprises, employees receive a fixed salary plus a variable part based on performance. “They win together, and they lose together, so all members get the same bonus.” said Sirletti.
Microenterprises went to hunt for new customers in new markets. They tried to sell things Fujitsu had never done before. Things like AI, blockchain, and analytics.
But most microenterprise members did not have skills and capabilities in those things. Now, the team members needed to collaborate closely to explore, sell and deliver these new services and products. Moreover, the microenterprises had to decide for themselves which customers to go after.
Domingos: “Some decided to go for a few very large customers, and others decided to go to many small customers. For our business these are important choices. And I have an opinion about that.
Some microenterprises did things that I would not necessarily do myself. But even if I had a different opinion, I needed to let the microenterprises be free to succeed, or fail. I had to force myself to shut up. I could only offer a different perspective. But I did not want to impose my views on them. And yes, as a leader this is quite hard. It takes courage to shut up.”
But it was not only Sirletti and Domingos who lost control. All heads of departments needed to be convinced to let go, even if they didn’t agree with some things.
Domingos told them before the experiment, “Look, this is what I want to do. If you do not agree, then now it is the time to say something about it. But once we have started the journey it will be too late.”
Sirletti and Domingos believed they needed to lead by example. They believed they could get others in the organization excited by talking about the journey and performance of the microenterprises in their part of the business.
Domingos: “We’re doing our best to influence the organization to become part of our journey. And I think we are starting to get other areas in the company excited about it.
Some of my colleagues in other parts of Europe have asked me what we have done, and what we have learned. They want to join our journey.”
Sirletti and Domingos are spreading their lessons as much as they can—both inside and outside the company. Even people who are not in the microenterprises can see the change happening, and possibly be inspired to join the journey.
The end of middle management
Adopting the concept of microenterprises is not easy. It implies the end of middle management in an organization. But to be clear: this is the end of middle manager roles, not the people who fill them. This might be one the most delicate issues to be dealt with.
What Fujitsu learned, on its relatively short journey, was profound. Not so surprisingly, they found traditional managers, like sales managers and team leaders, seemed to have the most problems with the change.
According to Sirletti, “The existing managers were biased because of their previous experience, and struggled to leave those views behind, and so were unable to fully embrace the new approach."
Domingos said: “We are not talking about the top leadership. We are talking about the middle rank here. The people for whom 100 percent of their job is managing other people.
The introduction of the microenterprises has forced people, now, to make decisions, instead of following processes. But the middle rank was used to following processes. They found it difficult to take ownership of their decisions.
Those who were not managers before found it much easier to make decisions. They were less conditioned to follow processes. They were less afraid to fail.”
But Sirletti and Domingos did not want to lose the people that filled the middle management roles before. They wanted to take them on the journey as well. “That’s why you need to start the journey with the cultural part.” said Domingos.
They learned some lessons from this.
Communicate & involve
Communication is very important. “If you want people to embrace transformation, then you need to explain what it is about. You need to explain to everyone why you want to go on this journey. You need to give them a very clear reason.” said Domingos.
You also need to clearly define what you are trying to achieve. You need to communicate what your objectives are. Domingos: “The way I presented this to people was we wanted to improve employee engagement and customer satisfaction.”
Domingos told everyone that they were now putting the customer first. That they were trying to connect employees directly to customers. They also introduced new KPIs to measure employee engagement and customer satisfaction for the new objectives.
Domingos: “We also defined a few things people could not change. We said, ‘You have a lot of autonomy to make your own decisions but these three or four things you cannot change.’
For example, they could not change branding. People needed to follow the official Fujitsu guidelines. This made sense to most people.”
Sirletti and Domingos involved everyone in the implementation of the transformation. They did not believe in a top-down directed approach.
“We just stated the problem and shared what we thought the solution was. But, we allowed people to construct their own solutions. We also organized coaching and sharing sessions between the different microenterprises, so they could learn from each other.” said Domingos.
Let go & train
The concept of Rendanheyi argues that the people in the microenterprises make the majority of the decisions. This implies that others in the organization have to give up their authority, and their control. They need to let go.
This is easier said than done. “When you place employees close to customers, and provide them with power, you need to be willing to accept a certain level of risk. For our functions, like Finance and HR, accepting this risk seemed too hard to do.” said Domingos.
“Usually, HQ reviews and controls. But a mindset shift needs to happen in terms of governance. So, we have forbidden monthly reviews. Because if you want to connect employees with customers you should not constantly review them. You should not constantly tell them what to do.
Instead, we introduced a team dedicated to coaching the microenterprises. They help them if they face difficulties with other departments. For example, if they need access to something. We also launched a team dedicated to sharing best practices from one microenterprise to the other.”
Sirletti and Domingos also thought about the functions. “If we wanted to take all the people on our journey, we needed some to stop being afraid of failure. If you're afraid to fail then you cannot let go of control.” said Domingos.
“So, I protected people and tried to make them feel safe. I did not say, ‘If it doesn’t go well, I will fire you’. Instead, I said, ‘We’re going to try this. This is our joint answer to our problems. But I will be there for you, because this is a learning experience for all of us.’”
One of the other things they did was to start offering training to those middle managers who are still in transition. “We felt they needed a bit of help. And we did not want to go on the journey without them. We wanted them to be part of it. So, we started offering training to make sure they could join us." he said.
The start of an evolving journey
Sirletti and Domingos said that they're still on their way to succeed. They regard the whole adventure as a journey of trying new ways and things they can learn from.
They have not applied the Rendanheyi methodology in its fullness across Fujitsu. “I'm a regional leader and there are decisions I cannot take—even if I strongly believe in them. I’m only planting a seed hoping that a tree will start growing at some point.” said Domingos.
Neither do they want the whole concept of microenterprises, or the Rendanheyi methodology, to become dogma. Domingos: “What I like about Rendanheyi is that we can adapt. I think the principles behind it will stay, but I do not know if or how the microenterprises will evolve.
I think that is the beauty of Rendanheyi; you need to accept that it's evolving.”