This episode is hosted by Boundaryless Conversation Podcast host Simone Cicero with co-host, Eugenio Battaglia.

The following is a semi-automatically generated transcript which has not been thoroughly revised by the podcast host or by the guest. Please check with us before using any quotations from this transcript. Thank you.

Simone Cicero:
Bill, thanks for being with us today. It’s a great pleasure to have you here in this conversation that we are trying to weave across the world. Basically the topic that we want to discuss with you, given your vast experience with these incumbent organizations, large corporations and institutions, it’s really about trying to understand how these players, how these types of players, will respond to the plummeting of transaction costs that we have been witnessing in the last couple of decades, and how their organisational models are going to transform and respond, as an answer to these new possibilities and new challenges. And I’m especially interested in exploring with you the cultural elements, the resistance we are going to probably witness in this context. Specially when we think about European and US based organizations.

Bill Fischer:
Simone, this is a topic of great interest to me and I know to you as well. It’s a pleasure to be here with you. I have to say that working with you over the last year has been really, for me, a great educational experience. So I’m looking forward to seeing if I can, in a sense, try to interpret the questions that you have in the light of the experiences that I’ve been having over the last couple of years, particularly with ecosystem development.

Simone Cicero:
So Bill, you have this amazing and long experience, with these innovative companies from the East especially with Haier and you also have a long experience with European companies. So, maybe you can quickly highlight the differences that you see in how these different approaches and cultures management have responded to the new possibilities that reimagining the organization in a more networked and independent way is bringing. What are the main differences that you are seeing in terms of cultural adoption or resistance?

Bill Fischer:
So, what I have seen is, if I look at the European companies that I work with, most of those companies are successful market incumbents, they’ve gone through an evolution where they’ve gone from being relatively idea rich and exploratory to, once they became successful in the marketplace — in the process of scaling up, in the process of moving from what my good friend, Charlie Fine would call “nail it to scale it” — in that process, they begin to lose some of their enthusiasm for experimentation. They begin to reduce variance wherever they can find it. And they focus on managerial choices that will reduce costs, rather than come up with novel ideas. In a sense, incidentally that’s not wrong: historically those have been exactly the right choices to make. Because as you become successful, you embody your customer base, you move from customers who are willing to entertain experimental types of offerings and who have a high tolerance for, I don’t want to say failure, but have a high tolerance for surprise to customers who are really looking at the brand promises offering the same performance over and over and over again. They want lower price and they want no surprises. So in being able to meet those changing customer expectations they make choices which are the right choices if you want to grow your business and make profits. But then they make the wrong choices in case a surprise occurs in the external environment that suddenly changes the situation around them. And I think we’re seeing that, I think I said that earlier, I think we’re seeing this in the coronavirus challenge today. But I also think when I think about Haier what we’re seeing is that their organization, their business environment is changing, and they’re moving from things they’re familiar with two things they’re unfamiliar with. And if they maintain their traditional organizational culture, they’re putting themselves in a no win situation.

Simone Cicero:
That is interesting Bill because one thing I was thinking when you were introducing this efficiency topic that when you think about efficiency, maybe in the traditional way that the western bureaucratic companies have been thinking about, it’s always about becoming a commodity, it’s really about becoming efficient and bringing, achieving economies of scale and serving as much as possible customers. On the other hand, it looks like when you evolve for a more efficient way to generate innovation in a networked world, what you end up doing is largely removing and reducing the importance of middle management, which is completely another route. A few days ago, I was looking at Twitter and I’ve seen Haier’s Twitter handles that — I don’t remember which one perfectly — but they were proudly tweeting that when they transformed the organization, they had to lay off like thousands of middle management. This is something that I couldn’t imagine to happen in our European or Western company or in general. What do you feel about that? Is this, the removal of middle management, something that is really an important aspect of restructuring an organization for the network age and how would this be accepted and put in place when we think about European or Western organizations more in general?

Bill Fischer:
So I think that the number actually was twice as many as 12,000 middle managers were removed. And and I think it goes back to asking yourselves, asking ourselves, what’s the role of middle management. And in a traditional pyramid structured organization there’s two primary roles of middle management: one is to take the vision and mission and strategy of the organization and then interpreted for different business units below in the pyramid; and then the second role is to keep checking up and making sure that they got the message and are performing against the criteria that were established. That assumes that the people at the top know what’s going on or are in a position to make the right choices and can move fast. What happened at Haier was that there was a belief that that was wrong that in fact they needed to flip their pyramid upside down, so that the people closest to the customer in a fast moving consumer market would be able to identify changing customer trends and respond to them quickly. And they didn’t need the control and checkups and conversations of interpretations about the vision and values because, in fact, they were the ones who were setting it. So, it wasn’t that middle management was bad, it was just no longer necessary with the changing organizational model.

Simone Cicero:
Would you think that such an embracement of middle-management-less organizing would be possible culturally, would it be culturally manageable in an a Western organization?

Bill Fischer:
So there’s no reason why Western organizations couldn’t make that adjustment but It’s not traditional. So I don’t think it’s unimaginable, but I think it’s not traditional, and it’s not something that there are many examples of. So it comes as a surprise. Then you have the shock of asking yourselves, what are we going to do with all these people? who incidentally, have been doing exactly what we asked them to do. Only the world around us has changed and we no longer need them to do that. So there’s a lot of, I think, understandable, practical reasons why this is so difficult to do. But it’s not impossible. Actually at the very early in my career, I worked with a company in Denmark called Oticon, a hearing aid company, much smaller, maybe less than 2000 employees, but they did this as well. So there are examples and there have been other examples of organizations that have tried to make this happen, but it’s not easy.

Simone Cicero:
One interesting way to look at that is to look at the Chinese, for example. The Chinese companies, they have a different relationship with two things: which is technology on one side and central authority on the other, I would say. So, if you look at Haier, for example, and the massive use that they are doing of coordination technologies — and this is something that also resonates with a few comments that Jos de Blok made at the Drucker forum where we were both present; and when he said that, basically in the context of Buurtzorg, they transformed the bureaucracy into software. So in one hand we have this idea that thechnology is going to be massively deployed in how you organize. And on the other hand, you said that in Haier, for example, they don’t believe that the strategy can come just from the top, but lots of general direction and general vision, the philosophical framing of the organization is coming from the center, from the board and from these very iconic CEO. So these two things seem like not just coming from China, but more in general, they see more tools that are more, apt to help organizations to restructure for an age of network. What do you think?

Bill Fischer:
I think what happens is that the role of the leader is critically important and I think Haier is fortunate enough to have a leader like Zhang Ruimin who is curious about the world around him, not accepting what’s been done in the past, but always looking for a different way to connect with the environment around the organization. Who is probably the closest thing to a visionary that I’ve ever met, and who is also self confident enough and has the organizational authority to really take some big decisions about how the organization is going to be run. But on the other hand, he’s been doing this for a long time. So the people who work at Haier are not surprised by it. They’re used to his style. Probably the people who couldn’t accept his style are long gone, and the people who join Haier today know what they’re getting into. So it’s an organization I think that is highly aligned, for lack of a better term, an entrepreneurial spirit where people really are looking forward to change. That’s not true of most organizations that I work with. Most organizations I work with, see changes episodic, not continuous, once we get through this, things will be better, but at Haier, we’re never going to get through this. It’s always going to be change after change after change. And I think that provides the organization with a spirit and an attitude that makes it easier to embrace change. So what a great advantage to know that your organization is looking forward to the next change, as opposed to going to work and knowing that your organization dreads whatever comes next.

Simone Cicero:
Can we say that maybe to achieve this transition, you really have these changes on these three layers: on the organizational design layer (that is more ascribable to a leader that can also act as an architect a little bit, so it can have this approach of architecting how the organization should work). But also two underlying aspects which one is profoundly cultural and the other is technological. So, there is this need to enable larger scale technologies that can help coordination happen through the organization. But there’s also this need to turn transition towards a new culture that is much more change-friendly, much more entrepreneurial. And when you were discussing these, I taught that it was also some kind of generational transition and maybe it is hard for us to understand this generationally when we talk about China because the demographics are completely different than Europe. But do you think that it’s also kind of generational problem that European Organization may be probably living these days?

Bill Fischer:
Well, I agree completely about the organizational architecture, and the massive technological intervention. One of the things that I’ve always been impressed by with Haier is that while I do believe they dream bigger, or they’re receptive to bigger dreams, they always compliment those dreams with extreme detail. So, you and I have have witnessed, how they have changed very granular mechanisms within the organization in order to better support the achievement of the dreams. So I always think Haier is a story of dreams and details. If you leave the details out, and many of the casual recollections of Haier’s success, don’t mention the details, what they’re missing out is the real underpinnings of how to make this happen. The organization is not only thinking about what do we want to do, but they’re very much worried about, worried is the wrong word, they’re very much thoughtful about how are we going to make this happen? What do we have to change in terms of our organizational design? What do we have to change in terms of our coordinating mechanisms? How is this all going to work so that, in fact, we can achieve the bigger dreams that we have? And I think that’s not necessarily Chinese. But I think it’s unusual. It takes a very wide leadership bandwidth to be able to both inspire workers to take chances and provide the structural elements to make it easier for them to do it. You know, you’re talking about generations. Zhang Ruimin is not a young guy, he’s my age, right? But he’s the author of these changes. So I don’t know how that works, but I do know that in many, many big innovations, what you see is that there is a senior figure, who is behind the scenes making things happen, so that the organization is able to achieve its ambitions. And almost always those ambitions are realized by a younger generation of people who have the energy and the ambition, but who in traditional organizations lack the political power, and in Haier the political power is being taken care of by Zhang Ruimin and his team at the top. So it makes it easier for people below to be able to do that. One last thought, I agreed with your use of the term architect, for Zhang Ruimin because I think in fact he has been an architect in terms of rethinking the organization. But as we sit here talking, it occurs to me that his role in the architecture has frequently been to remove impediments, rather than to put new approaches into place. So I think what he’s done is he’s removed barriers to change, and encouraged his colleagues to create these new approaches to change. Some of them are going to work some are not, but they’re not guessing about it. They’re trying it.

Simone Cicero:
Definitely. I think this is something that we all read. We also witness this idea that architecting sometimes it’s about removing, and especially when it deals with bureaucracy. The role of removing bureaucracy, it could be definitely the role of the architect. You know, we spoke a lot about Haier and we’re gonna give some information in the podcast notes for our listeners, but this transition, this transformation, is this something that you just witnessed in Haier or do you think, that in China for example, there is a broader movement that is more inclined to these transformations, or is it just really this company — that is among others maybe also in the West — that is setting the stage for this transformation?

Bill Fischer:
I think that, in China, like in the West, there is a startup culture that’s associated with new economy types of activities. These organizations are characterized by giving more autonomy to work units that are closer to the action. I think what makes Haier so interesting are three things: one is it’s not new economy. It’s a historically old economy company. The second thing is the scale. It’s 70,000 employees. It’s not a bunch of people in an incubator. And the third thing is, is that it’s it’s been doing this for 35 years. So, there is a degree of consistency and persistancy here that is simply unimaginable. But I think that what they’re doing is not at all unique. I think it’s unique to their sector. It’s interesting, well among many reasons why the Haier was so interesting was because China was traditionally seen as a classical, centralized hierarchical society and that it would be more difficult to do these types of autonomous work unit initiatives. But I do see it elsewhere in China, but I think Haier is exemplar. It’s really the one that’s doing more of it faster first, and longer than anyone else.

Simone Cicero:
So, Bill, let’s move into a more general reflection in terms of when we think about corporation and when we think about an existing institution and we want to imagine how these organizational structure needs to change and tansform in a way that embeds and integrates these new ideas of platforms, ecosystems and network structures. What patterns do you see emerging in terms of organizational structures and designs?

Bill Fischer:
What’s interesting to me is that I think that this whole movement towards ecosystem development is being driven by a realization that traditional organizations on in rapidly changing industries, lack sufficient expertise, to be able to address all of the more the evermore complex issues that are being driven. So if we think about Haier, they were doing just fine before intelligent, smart homes became a possibility. And once smart homes became a possibility, then they dramatically had to change their expertise base. I’m always struck by the fact that they said that, for years, they would see a customer every 15 years, the customer would come in, buy a refrigerator. If everything worked well, if the customer experience was satisfactory one, the customer would reappear 15 years later, higher would know know more about the customer than they knew before. And the customer would buy another refrigerator. Now all of a sudden, and and this was not Haier’s doing this is, you know, this external tectonic shift that’s taking place around the Internet of Things. When the internet and the thing Internet of Things hits the home, and particularly hits the kitchen. Then all of a sudden, Haier is in a position to speak to that customer 10 to 12 times a day. That changes everything that absolutely changes as Haier doesn’t have the skills, they don’t have the expertise. They don’t have the tradition, they don’t have the organization. You know, they don’t have any of this stuff, they need to be able to satisfactorily consummate those conversations. So they need help, and what I what I admire so much in the way higher works is that rather than try to do this inside, you know, all by ourselves, what they did then was to willingly seek out partners in what now has become an ecosystem, seek out partners, who presumably were always there, but were not recognized as such. And they’ve embraced them in a way that allows those partners to contribute the full extent of their expertise, and do it in partnership with Haier to make the, in this particular case, the customer’s experience so much richer. And then in order to do that, in order to do that, then they had to change the way they were organized internally, because the old organization was no longer fit for purpose. The old organization required a high degree of autonomy at the customer facing units, and a willingness, to really blur the boundaries between hire, and its potential ecosystem partners, so that there would be a degree of trust and sharing that had never before existed. And those are, I think, heroic choices that have to be made by leadership. And they’re mostly choices that involve removing barriers to connectivity and, and trusting the workforce to get on with the job and do what they can do better than anyone else.

Simone Cicero:
It’s also very interesting to, to see that basically, in this transition, you need to start factoring in much more different stakeholders when you think about your organizational design. So for example, one thing that Haier, but in general, a Chinese company do quite a lot is to, you know, basically imagining roles for for people in their networks. So, for example, in China, there is a lot of people that are really actively socially organizing their communities by, you know, they maintain, for example, these large networks of contacts and you know, they’re actively involved in bringing new services into the into the market and so basically, somehow an organization a modern organizational model needs to be also culturally ready to involve non-employees in a more much more regular basis. So for example, you spoke about having contacts with customers every every 10 or 15 days instead of 15 years. But my impression is that it’s not just, it’s not just about customers anymore. It’s also about you know, all these active producers of value in a way that is very similar to what companies like the Airbnbs or the Ubers of the West, have are doing by leveraging this workforce more generally, more widely. Maybe the difference if I can spot one differences, you know, the traditional platform marketplace model that we’re seeing in the West, is considering people much more like resources or commodities that can be leveraged. While on the on the on the other side, you know, what I see for example, happening in hire, there is much more space for these people in the ecosystem to really be creatively engage you with these new roles and develop that entrepreneurial spirit as well.

Bill Fischer:
Yes. So I think what Haier realized and you know, this is not this didn’t happen overnight. This has been 35 years in the making. But Zhang Ruimin has always had this great abiding faith in the power of his workforce, that they know a lot of stuff, but that the organization has historically been in the way of them fulfilling the full realization of what they know. And so what what I think he’s done in this particular case, is, as they moved into realms of expertise that they knew nothing about. He was willing to say, to acknowledge that to say we don’t, we don’t have those skills or talent. And then he was, he was willing to support the building of platforms that made it easier for these “outsiders” to become insiders. So you know, they broke down the barriers between outside and inside. And they allowed people from all different walks of life to suddenly bring their ideas to Haier and if the ideas made sense, to become part of an ecosystem, that shared the value created among all of its contributors, so that they would benefit from it. I think it’s, it’s such an interesting model. Because what it says is that together we’re stronger than we are apart and also it does not presume to know which areas of investment are going to be likely to be the most successful. So it invites people to place bets on and by placing bets Haier well, I guess I believe that in the future in an unknown future. Incidentally, it’s an unknown future because we’ve never done this before. Historically, most organizations are built to deal with uncertain futures. things we’ve done before we’re familiar with, we just don’t know the day to day variations. This is much bigger than that. This is where do Haier is dealing with a future that the smart home that nobody had ever had to deal with before. So it’s hard for them to predict what’s going to be successful or what isn’t, because there’s no basis of historical evidence to make those predictions on. And so what Haier has begun to do is to say, we need more ideas rather than fewer. let’s break down the barriers that have kept outside ideas away from us. Then let’s let people take chances and who better to take chances than the employees who are either passionate about an idea or closer to a customer and understand those ideas. So, in many ways, Simone, one of the things I’ve learned from you, that I think is so important is that I have been, you know, I’ve grown up in a sense in a world where the customer experience has been the ultimate defining basis of success or failure. And I still think it’s a critically important basis of success or failure. But that works best in a world that’s familiar. So we can bring the ideas inside, and we can get closer to the customer and we can help the customer develop. But what you’ve pointed out to me, I hope I’m saying this right? Is that Haier’s ultimate advantage in the future might be its ability to curate relationships among insiders and outsiders. So that they are able to create customer experience that no customer has ever thought about. They’re able to deliver on the customer experiences the customer has thought about, but it’s the it’s the ability to attract these and develop these relationships, that has become much much more important in the future than it was in the past. Am I getting that close?

Simone Cicero:
Yeah, that definitely resonates with with how we generally see this evolution of of the firm towards more like an interaction facilitator than actually a production, you know, an operational artifact.

Bill Fischer:
Yes, exactly. And, you know, so and to do that you need to a different organization, because the old organization that was that was internally that was, you know, internally capable, is no longer fit for purpose. So you now need a new organization. And I think the platforms that Haier has built on our and that effort to make that happen in an organizational sense.

Eugenio Battaglia:
So when I think of the Haier model, I always try to imagine how this will fit in a Western or generally European context and I think about the regulation around the industry regulation and I can even imagine that to evolve to accommodate for such a model in the Western world, what I really cannot imagine is how to channel the inherent petty politics that exist in this kind of, in many organizations that we know and how this is different in China culturally or because of the “Rendanheyi” or because of the size or because of different kind of specificities.

Bill Fischer:
So, if, I think this is a general phenomena anywhere and I think we see glimpses of how it of how the Rendanheyi model works, could work in a Western environment. So for example, we sit here talking in the middle of the coronavirus outbreak and which is shaking our economies and our societies to the very core: things unthinkable only a few months ago are happening all around us. And I’m, I don’t have to tell you being based in Italy, how profound this is. If you take a look at the same time, if you look at the outburst of innovativeness that is taking place, people who are redesigning ventilators, when the hospitals can see no other way of getting the ability to care for patients, people who are reinventing face masks when face masks are unavailable in our societies. People who are trying to decode the virus and then come up with some way of addressing it, vaccine or otherwise. I’m so impressed with the tempo of the innovation that’s taking place, but where is it taking place? It’s not taking place in the big organizations, like the big organizations inevitably slow it down. It’s taking place in groups of people who historically would never have been involved in the conversation. And I see the same sort of energy and spirit and entrepreneurial activities taking place around us today, that Haier has been able to unleash over the last few years with the Rendanheyi model. And I think the what’s common between all of them is a recognition that anyone can be an entrepreneur that anyone can be a maker that we all, we all have a stake in the future of our organizations, our societies, a recognition that organizations can get in the way and so if we can essentially de-organize, you know, go back to smaller, faster moving groups, localized decision making, at the front of the process rather than at the end of the process. And if we add our highly experimental and what we do, knowing that most of these things are not gonna work, but giving anyone with an idea and opportunity to take a chance. And then finally, finally, which I think is important to both Rendanheyi, and what we see around us, there’s, there’s the, there’s the hope that my idea is going to make it big. And if my idea is going to make it big, we’re all going to share in the value created, me included. So those are all I think part of the liberating energies of Rendanheyi. And what Haier has been able to do, is has been able to do that as part of its organizational operating system, right. It’s become the origin Operating System, whereas most organizations, most traditional organizations are unable to do that, because their internal operating system is based on command and control. It’s based on the reduction of the individual rather than the enlargement of the individual. It’s based on it’s far from sharing the value created, and so on. So I’m optimistic about the application of what RenDanHeYi could do with with organizations whether they’re Chinese or Western. Do you agree with that? I mean, Eugenio and Simone? Am I saying something that’s surprising or, you know, outrageous, or do you agree with this?

Simone Cicero:
Well, you know, I will speak on my side and then I’ll let to Eugenio to integrate. It totally resonates. One thing that resonates in a weird way I would say is that I think sometimes that the command and control structure that most of the traditional Western organizations are projecting on their employees, it’s more like a cultural element than actually an organizational element. So, I mean, you know, we invented bureaucracy in Europe, and somehow we invented this relationship with between capital and labor. And sometimes it feels like a you know, this command and control structures are more expression of this cultural tradition and relationship between capital and labor as you know, the good old Marxist literature explains, then actually, something that is useful to achieve something on the market, you know. So it’s not a case I believe that the two main reasons revolutions that we have been witnessing in terms of management transformation, one is for sure the Japanese Toyota led lean revolution that was always about putting people at the center. And, you know, giving them the space to express themselves. And even more this new revolution coming from the experience of Haier that really turned into an earlier one. I think somehow both of them are more like culturally challenging than actually organizationally challenging for for Western organizations. I don’t really feel generally if you want to add something more.

Eugenio Battaglia:
To me the consideration and in this case, there are many. I think, when it comes to this kind of conversation we are often we’re often projecting all of this conversation into something that should be external, like a model that should work upon us. And that’s all fine because that’s also what we need. What I think That Rendanheyi and other kind of cultures of work have nailed down is something that resonates with the actual culture, and the motivations of the of all different stakeholders. And so this I think, is a fruitful way to channel everything that doesn’t work. Because when we talk about petty politics, which was my point just a minute before, but also inefficiencies in terms of organizing, coordinating, and so on, these are all come because of years and years of not listening to this ecosystem of employees, of entrepreneurs of partners. So to move out from this, it takes a while. It’s not something that you just adopt from one day to the other is not just like you install a tool and then from tomorrow on your entire organization is going to work in this way. So it’s a social-technical system and it works with people and people have their own behavioral change that requires time and so on. So I really tried to figure in my mind what in the innovation culture and the change culture in the western organizations that we work with, what could be the fruitful context for this to to change the rules of the game and to bring people in this direction rather than keep competing but in a toxic way and for the few power positions and this kind of benefits? That model is like not working anymore. This we know, and so I’m really interested in this.

Bill Fischer:
Well, so the role of the visionary leader should n ot be discounted. I think what you need is someone who is in a position to authorize change, make people enthusiastic about change. Provide direction without a recipe for how that direction is going to be fulfilled. I mean, I think all of those things are critically important. And I think at a societal level in the West, we lack that, at the moment for sure. And in many of the organizations that we have, the people who are at the top of those organizations were never chosen for those criteria, for those attributes. They were chosen for other attributes, usually around some type of technical or commercial expertise. And so we probably have the wrong people running many of our organizations. It’s not that they’re malevolent. It’s just that they don’t know how to change they’ve spent their entire careers, amassing power, and now we’re saying you have to give it up and that seems to them to be insane and Haier, of course, has the benefit of somebody who believes that that’s not insane to do. And he’s been in that role for 35 years. So so I think that’s, that’s an advantage. But the other thing is, is we need this architect role, who is so that at the same time, somebody is saying, how do we make this possible? How do we do? So Simone use the, the the idea of Toyota? Well, what Toyota was also doing at the time when it was building these lean organizations and really moving in a very, very different approach to manufacturing, what they were also doing, where they will also say, back when they went into China, they said, look, there’s three things that three things, all three of which cannot be new. We cannot build new products, with a new workforce in a new factory, right? If we if we do that, we’re setting ourselves up to fail. Somewhere there needs to be an old, it there either needs to be experienced workers, or it needs to be a well established factory that’s run in the past, or it needs to be products that we’re familiar with. And so when they moved into China, in the 90s, I guess it was, they they brought Japanese workers into new factories to produce somewhat new products, but these workers were experienced. So it wasn’t an abrupt change. And, I think Haier has done that over and over and over again, Haier is never taken a flying leap into the future. It’s, always had some familiar things, their their performance management system, I would argue has been virtually unchanged for 30 some odd years. And so, I might not know, this new challenge very well, but I know I’m going to be measured, I know my performance is going to be judged and as a result can have some confidence in the decisions that I make. And I think that degree of attention to detail has been extremely important as a contributor to Haier’s success. Also, one other thing, also, historically, Haier has made big changes when it’s successful. And in many of the cases, many of the Western firms that I’m working with, they are past success right? they’re in the post success era, so that they may still be an incumbent market leader and they may be successful relative to the way that the existing industry works. But they’re smart enough to know this is not the future that the future is going to be very, very different. And everybody in the company knows that. And so what happens is that people in the company are worried and resources are scarce. And that’s the wrong time to make a big change. When you want to make a big change. Make the best big change when, when people are successful, and they’re comfortable with each other. The resources are abundant, and they feel good about themselves. And Haier has done that, you know, in some ways by essentially provoking a big change periodically. It’s done that at the time when most most organizations, particularly most shareholder-led Western organizations, would be trying to get a year or two more out of the advantages associated with already long-lived, successful product. Haier is at that point in time saying, let’s cannibalize that success. Let’s cannibalize our profits. And let’s change because the industry is going to change we can see that and let’s be at the forefront of change. There are companies that have done that. Intel did that for many years. Apple has sort of done that for many years. Maybe not today, but in the past. So it’s not a I don’t, you know, it’s not a an unprecedented thing, but to do it for as long as Haier done it on the scale that they’re doing, it’s really impressive.

Simone Cicero:
And Bill as a closing reflection to this conversation. I want to ask you one thing, you know, you spoke about what’s happening and you quickly spoke about the future. So my question is really, how do you see the future in terms of organizational development and transformation this context now because one thing that scares me a little bit is that you mentioned that most of the Western companies are now in a context of I don’t want to say fear, but you know, resource reduction and changes coming up for whichever organisations are clearly not ready. So given these and given also the new risk factors that we are clearly seeing, you know, today’s 30th of March. And we are all recording this from our houses because more or less everybody’s been locked down to due to this corona virus epidemic. So given this new context, new risks coming up challenges arriving in a context of management and organizations that are already suffering a lot of, you know, their lack of transformation in the last maybe 20–30 years. How do you see that playing out? How do you see these organizations of the future transforming?

Bill Fischer:
So if I go back to a couple of successful transformation experiences I’ve seen outside of Haier, and they’re not new ones. I’m thinking of three that I can think of: one is Oticon in the 90s when it went through a rather dramatic change in Denmark, but it was at the time one of the world leaders in its industry it still is. The second was ABB under Percy Barnevik, when they decided that they needed to get more out of their new organization, which was a joint venture between two very strong Swedish and Swiss organizations, and they needed to get more out of that. And then today’s, as I understand what’s going on today at General Electric Appliances in the United States, which is owned by Haier, I think some of the things that I see in common is that is that there’s a degree of honesty between senior management and the workforce which is treated differently. The workforce is treated as colleagues, rather than as bosses and employees. There’s a degree of honesty in the communication between senior management if you will, and the rest of the organization and the honesty is about the situation that they feel the organization is in and there’s an invitation to help out. IMD did work a few years ago with Stora Enso the Finish company that was, I believe this is true, I may be off by 100 years but was first founded in the 14th century. And they reached a point their paper machine making companies, they reached a point where the senior management team led by a very, very interesting CEO put out notice on the intranet saying, you know what, we need help. We need help from everybody in the organization. We need ideas… to the point where they had parallel groups of management teams representing new ideas and old ideas, if you will. That’s probably not the right way to characterize it. But so I think there’s this willingness in organizations that face these challenges, to recognize the skills and talents that are assembled in the organization, to embrace an attitude that says we believe our people want to succeed. And we want to help them do that. And then the dismantling of the barriers that get in the way. And I think as part of that, remember? we talked about middle management earlier as part of that one of the real sources of fear, infectious fear in an organization is what’s going to happen to us and that’s particularly important in middle management organizations, in the middle management of organizations that are facing profound transformational change. And I think that the organizations I’ve described made a really conscious effort to work with middle management to help them figure out how they could continue to add value in an organization that no longer had that middle management role. And you know, for the most part, they did it. The people at Haier that were laid off, were not people from what I understand, we’re not people who were unable to think of how else they could add value. But we’re people who chose either not to participate in that exercise, or who wanted to retain traditional roles at a time that the organization needed to be re-architected or redesigned. And so they really didn’t want to be part of the future, they chose to remain part of a present that was soon to become the past. And so I think we need to shift very much towards leadership and organizational design, but incorporate the change who’s involved in that conversation and change their access to facts, you know, This morning, the first thing that I saw in the newspaper, when I woke up was a headline that said, government officials debating how much should the public know. Bad situation to be in the public should know everything. We’re all in this together, the worst thing that can happen is an erosion of trust, because we discover that we’re not being told the truth. And that’s as true in societies as it is in organizations. So I think it takes a really profound rethinking of who we are, as a community, what we stand for, and how we can best participate and involve invite everybody in because those ideas could often be really good ideas.

Simone Cicero:
And this Bill is gonna be very challenging to the organizations because, for example, if I think about when we were together on the stage at the Drucker Forum with the representative of Haier group, and somebody from the audience said, “you know, it’s not gonna be easy for everybody to become a CEO”. And he was so smart when he said that, quoting Peter Drucker what higher asks to his, its employees is not to just become CEOs by these to become CEOs of themselves. And I think this is an essential question that when you start to praise for more entrepreneurial spirit because your knowledge that the the world that you live in is about being continuous change and rapid change and needs more skin in the game and it’s more energy and entrepreneurial spirit, then it’s gonna be much harder for the organisation to exist ina way. So everybody becomes an entrepreneur that needs to be some added value. The organizational structure gives you as an entrepreneur to enterprise inside a shared the context. Otherwise everybody will go for enterprising outside and create new organizations. So the big question is for large organization existing. What do they add to this new context of enterprising to respond to this world in turmoil and change and transformation? What do you think?

Bill Fischer:
Yeah, I think exactly. And you know, what’s so interesting is that I think Haier is still working this through. So if you think about the platform organization, it seems to me that — and you think about EMCs — the real articulation of micro enterprises — so that they work together in a more coordinated effort rather than work spastically independently. I think what we’re seeing is that as Haier, and I’m using Haier only as an example here, as Haier has more experience in in dealing with micro enterprises and how they form, and how they interact with ecosystem partners. That what Haier is building up is shareable learning. And, you know, John Hagel has written a lot about the difference between scalable economy of scalable efficiency, which, you know, best practices and the way in which we go about emulating the best factories in a network to developing scalable, scalable learning. How do we learn? How do we learn from what each other is doing? How do we learn how to and how do we share that I think that the platform organization in Haier is really well suited to deal with scalable learning. So that the reason a micro enterprise wants to remain at Haier or join Haier if it’s an external micro enterprise it’s because it wants to be the beneficiary of the largest set of scalable learning around. The other thing that comes to mind is that we have historically not prepared leaders to be makers or entrepreneurs. You know, we have that those things are not covered in MBA programs. We don’t address them in classical executive development programs, we’ll do strategy, things like that, but we don’t deal with the personal responsibility that’s involved with this role. Well, Andy Boynton and I wrote a book called “The idea hunter” because what we argued was that the organizations we worked with hired great people, and they turned them into average employees, and they did it very, very quickly. So the people that we would see at night at the bar were very different than the people we would see in the classrooms. They were more interesting. They were more energetic. They more ambitious. How do we create that same environment in an organization? And how do we, and how do we reinforce the belief among individuals that that’s the way we’re going to be? Right, that we’re going to be about the best parts of view, not the worst. And we’re going to be about the things that make you most happy, if you will, not the things that that enervate you. And that’s going to require a lot of experimentation and at Haier the way in which the micro enterprises are structured, I think, allows them to take to make experiments in that regard, both experiments, and what are the ideas we’re pursuing, and how are we pursuing them? How are the partnerships we were doing? And I think that there’s a high mortality rate, but we’ve been told that there’s perhaps 80% mortality among the micro enterprises that are started. So we see that some don’t work, they don’t work either because the market it’s not interested in what they’re doing, or they don’t work because the people in the micro enterprise can’t make it work. They can’t make the relationships with ecosystem’s partners work, they can’t work amongst themselves. And maybe this is the right way to do it, as long as there’s this distilling of the lessons learned so that we have scalable learning taking place as well.

Simone Cicero:
Well Bill, that’s I think, an excellent note to end this conversation to having identified that when we talk about the future of organizing throough platforms and ecosystems, we talk about organizations that need to somehow justify their existence, and as a powerful attractor and magnets for the enterpreneurs that want to learn faster so organizations really, I think this is a very strong new challenge for thinking the organization of the future: how to exist, how to create this space for learning so that it will be worth to enterprise through the brand, through the organization instead of becoming, you know, creating something new outside of an organizational ecosystem. Eugenio, do you want to add some comments?

Eugenio Battaglia:
Yeah, I’m just very excited. And yeah, very curious to see how these principles might apply not only to different geographies, but also to different contexts, industries and communities in not profit, yeah, but also like non-business related contexts where there might be a different kind of neurodiversity than the entrepreneurial mind, and how this model will empower different kind of intelligence and different kind of minds, in the artistic field and so on. So super excited to see this evolving further.

Bill Fischer:
Could I just say: inertia is a powerful force against change and for the moment, unprecedented inertia has been stopped only maybe for a couple of months. But it’s a chance to rethink how we go about doing what we’re doing and why we’re doing it in the first place. And I think most organizations, because of the shareholder led model, shareholder value model will not take advantage of making these, you know, reflecting on this, but boy, is this a great opportunity.

Simone Cicero:
That’s it. Thanks very much for this awesome conversation, Bill. I think I was gonna be super insightful, especially for those of our listeners that are involved in existing organizations that are questioning now and thinking about how do we evolve in this crazy world, we are going to look, we’re gonna, you know, participate within in the next decade or so. So thanks again for the conversation and we’re gonna you know, we’re going to share with these with with our listeners. Listeners that want to check Bill’s the work can check his books. And we’re going to share in the show notes, a lot of the examples that Bill have shared with us today. Thanks again for listening and talk to you.

Bill Fischer:
Thanks. Great pleasure