This is an excerpt from our book titled 'Start-up Factory'
Each year the Business Ecosystem Alliance (BEA), initiated and supported by the Haier Group, awards “Zero Distance Awards” (Z-Awards) during Haier’s annual Global Rendanheyi Forum. Award-winners are recognised for their efforts to directly connect business with end-users so value is created as seamlessly as possible — ideally reducing the distance to zero. This philosophy is central to Haier’s management model for the IoT era.
In Japan in the 1980s, the quality/efficiency revolution revolved around producing products with zero defects. But, with Haier championing zero distance, the focus shifted from product to customer. Superior experiences, the argument runs, bring higher commercial value. In September 2020, the BEA launched the Z-Awards to recognise organisations putting end-users at the heart of their operating systems.
At the inaugural ceremony, BEA and Haier rewarded 10 organisations from around the world for their enrichment of the zero-distance concept. Domingos and Sirletti of Fujitsu Europe received awards for pioneering the Rendanheyi model in a foreign corporation: “decisive action to create and drive a customer-obsessed mindset”. “That’s a source of great pride,” said Domingos. “External recognition is always a boost for confidence and a sign that our organisation is moving in the right direction. We have been pushing for a customer-obsessed mindset. Zero distance means we’re putting the customer at the heart of things, and we’re more agile and more responsive to customer requests and needs.”
GEA was another winner. “It means that our transformation is working,” said Nolan. “It was only four years ago when we read for the first time about Rendanheyi and its zero-distance principle. In 2020, we confirmed the power of zero as a business driver that’s enabling a successful performance. We’ve taken the concept to a new level, applying it to every angle of our work.”
Jaipur Rugs and Severstal
Another company inspired by Haier to translate the Rendanheyi philosophy is India’s Jaipur Rugs. Jaipur Rugs was founded by Nand Kishore Chaudhary in 1978 with just two looms and nine workers. Today, it has a network of 40,000 artisans spread across 600 Indian villages and is one of the country’s largest manufacturers of hand-knotted rugs. CK Prahalad included Jaipur Rugs as a success story in his bestseller The Fortune at the Bottom of the Pyramid, citing it as an example of a social business which helps in tackling world poverty.
Jaipur Rugs won a 2020 Z-Award for embodying zero distance: artisans were in direct contact with customers in the Western world. BEA and Haier recognised the culmination of a 42-year journey that had transformed the lives of 40,000 weavers.
In recent years, Chaudhary, inspired by Rendanheyi, got in contact with Ruimin and the Haier Model Institute. After some knowledge-sharing, the founders of Jaipur Rugs followed the microenterprise model and started its own transformational initiative, dubbed “Each Artisan an Entrepreneur”, advocating self-management and connecting the weavers with under-served customers. Zero defects, zero wastage, on-time, every-time delivery. “This makes the supply chain more agile and creates an emotional bond between weavers and consumers,” said Chaudhary.
Through Rendanheyi, Jaipur Rugs aims to reduce the distance still further. “We are fully committed to bring it into our entire business,” he said. “We are constantly learning and implementing it throughout the organisation. We plan to integrate technology, develop the world’s best artisan proposition, expand our retail presence and collaborate with more likeminded partners.”
One other winner that year was Severstal, a company that wanted to learn directly from Haier. The Russian steel and mining company, headquartered in Cherepovets, has 50,000 employees, and produced 11.3m tonnes of steel in 2020 —resulting in revenues of $6.87bn.
Severstal won the award for introducing the zero-distance concept to reinvent the conservative steel industry. In the second half of 2019, a group of Russian Severstal employees travelled to Qingdao to learn about the Rendanheyi model at first-hand. Not much later, the company began introducing the model.
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