Bill Fischer:
00:00:00
You don't want to hire smart people and put them into a dumb organization because then you'll have angry smart people. Better to leave it as it is. What Haier has realized is that organizational vitality is important. Traditional organizational structures are complicit in reducing vitality.
undefined:
00:00:20
Yeah. Yeah. Yeah. Yeah. Yeah. Welcome to Work Matters, where we explore what leaders can do to make work more productive, valuable, meaningful, and impactful. I'm your host Thomas Les. The Chinese company hires a manufacturer of home appliances that over the last 40 years has developed unique and very successful operating model. In this episode, I have the pleasure to talk to Bill Fisher, who has followed the highest story up close about how the company operates and what we can learn from it. Bill is a well-known expert in innovation management. He has taught at Premier Business School such as MIT and IMD, and he is the author of several books, including Virtu of Teams, the Idea Hunters and Reinventing Giants. In this episode, bill takes us through the evolution of hire from local Chinese refrigerator company to global innovator. He explains the principles at the core of its success, zero distance to the customer and entrepreneurship. And shows us how higher users, microenterprises, and platforms to bring these principles to life. The higher story is a fascinating case study for how even large companies in established industries can tap into the power of entrepreneurship. If you like this conversation, please subscribe so you never miss an episode. And now without further ado, he has my conversation with Bill Fisher.
Thomas Bertels:
00:01:51
So I'm super excited to have a new friend on the podcast, Bill Fisher. I met Bill at the Drucker Forum, I think maybe two years ago,
Bill Fischer:
00:01:59
Yeah. We're hardly new friends, Thomas. We've known each other for at least three or four years, right? For a bit for a bit. And you're known for a number of things, including I think your book idea Hunter. But you also worked a lot with hire or you spent a lot of time understanding hire. And there's no shortage of great innovation stories, but there's not a whole lot of companies that actually. Turn that into a sustainable track record, right? That we're able to sustain that. And Hire is one of those. And you had that some unique insights there. So that's one of the stories that we want to jump in. Could you maybe just take us back? Like, how did you first get involved with Hire? Can I preface this for a second by saying, I, I I have spent my professional life in executive education and and in the, in class after class with well known successful companies, mature companies in mature industries, there's a need for hope, right? the people in the room are really Always inevitably interesting people, and they're ambitious and full of energy and the like, but they're in organizational traps that really constrain their potential, right? And showing them pictures of Silicon Valley, And kids running around in flip flops. That's not going to do it. So the thing about hire is that It's one of them, right? It's a large, complex, successful organization in a, in an old economy industry, or what used to be an old economy industry, and it's mature. So it resonates with these audiences. My interest in in, in Hire has been the fact that it's a really good way to connect with the audience. And I have to say that there's also a bunch of books out or coming out that keep the story fresh, right? So Umbergo Lago has a book about Hire Out that's just got out last year and and Janka, and I'm going to mangle her name, Cleaves, Grengs, she has a book coming out on anti fragility, and those are really interesting books for bringing the story up to date. Okay, so that, that's just a preface. How did I get interested in Hire? First got interested in organizational transformation in the early 90s when I moved to IMD. a friend introduced me to a company called, a Danish company called Oticon. They make hearing aids. And they had a new CEO named I have his book here. Hang on just a second. Our new CEO called Lars Kohland. And Lars came from outside of the industry. He was in the Danish Atomic Energy Commission. And he came into this old and smallish but very successful market leader and turned them upside down. No titles, no offices, no paper. It was really an amazing sort of thing. I went up there and wrote a case about it, became fascinated by it, and started thinking about how organizations might be redesigned. Okay, so that was the start of my interest, but a few years later, I had the opportunity to move to Shanghai and to become the president of the China Europe International Business School, SEIBS. And I was in Shanghai in 1997, I think it was, for maybe a couple of weeks, just trying to get established so that I could move my wife and I over. And one of my colleagues at SEIBS said to me, I've just been in Qingdao, and I've run across this organization that's doing really interesting things. You ought to go see it. And my colleague and I flew up and what we saw was extraordinary, right? Because what we saw was an organization it wasn't a state owned organization, it was a collective, which made it even more confusing. But it was an organization that had the ambition To compete against much bigger state owned enterprises and ultimately foreign enterprises, whirlpool and Bosch and Siemens and, Panasonic and GE that were thinking of coming into the Chinese market. And they were doing well. And they also had a brand which was becoming highly recognized within an economy where brands had not had any purchase on the customer imagination. Because there were no, except for a few, flying pigeon bicycles and Hero watches and Lucky. Lucky candy and stuff like that. There was chocolate white rabbit. There were very few brands in China. So this was a really interesting story on many dimensions. And I met the newly established general manager, managing director, I guess would be the right term. His name was Jiang Ruimin. He was a young man at that time. I was also a young man at that time, more or less. And he had this vision for an organization that was extraordinary that I had never heard. I, in the Chinese landscape, I had been working intermittently in China every year since 1980 at that point. So I had about, 17 or 18 years of experience on the ground in China. And and this was a new story. And so I kept up with this. When I moved back to Europe, I invited Mr. John to come to IMD and talk to our international alumni group. We wrote cases about hire and and so that was the prelude to this relationship. A couple things to establish. So Haier was led, not owned, because it was a collective, so it was owned at the time by the collective, the owners of the collectives that were put together to create this company. It had been called the Qingdao Refrigerator Company. Because it made refrigerators in Qingdao, and it was led by the municipal government the Light Industry Bureau. And Mr. Zhang had worked for the Light Industry Bureau as one of the people who was in touch with Hi, with what eventually became higher. And in 1984, when the manager when the managing director of higher left retire, I don't know, retired or resigned. They couldn't read. They couldn't fill the position. Nobody wanted to take over the position. It was an organization that was not in great shape. So Mr. John
Thomas Bertels:
00:08:20
So I'm
Bill Fischer:
00:08:21
left government employment and went to work as the managing director of this firm. And he had been involved in the early relationship between Haier and Liebherr, the German home appliance company, among other things, cranes and things like that. And so he had a feeling that Haier was better than it was Liebherr. Allowed to be or and he came and provided a vision, but more than a vision. He provided an entire operating system. You use the word operating system. The conversation we had in December, he used, he created a completely different operating system for the organization to give it a better chance of achieving the vision. Okay, so that's how this all started.
Thomas Bertels:
00:09:08
think one of the things that intrigued me about this story is that he was a Drucker fan, right? I think some of these ideas didn't come out of thin air, right?
Bill Fischer:
00:09:17
He's a very. Interesting person. One of the most interesting people I've ever met. Probably, certainly the most interesting executive I've ever had the privilege of meeting. Insanely curious. Interested in almost anything you're talking about as long as it has to, is in the orbit of improving his organization and its people. Or maybe reverse, its people and the organization. As managing director, he had the opportunity to meet a lot of people who were interested in change in in, in China and to Invite them in to share their ideas, and then he also had the influence within the organization to pursue those things, to execute on them. And so it was, one of those really interesting more than coincidence, one of those really interesting situations where the person who is attracted to the idea also has the opportunity to put them into action. And he was a former government employee, a bureaucrat, right? And a druckerian, as you said. So apparently there was a Drucker Society in Qingdao at the time, and I've been told that mr. Zhang gave a talk entitled Forever Drucker. I just find that absolutely fascinating. But, true to form, he has, over the 30 some odd years that I've known him, he has remained faithful to the ideas of Peter Drucker. As an organizing operating system method.
Thomas Bertels:
00:10:49
So let's unpack that a little bit, what do you think is at the core of Haya's success?
Bill Fischer:
00:10:54
So the leadership has been remarkable. Okay. And it has remained faithful to the original goals established which were very briefly a great customer experience. Entrepreneurship as the mechanism to unlock the energy and creativity to provide the customer experience and thirdly, sharing the value created. If you're going to Treat people as entrepreneurs, you should reward them as entrepreneurs. Those three things, and they came right out of Peter Drucker, the object of a business is to create and keep a customer, and entrepreneurship is the best way to do that. And I think that's part of it. Second part is, you cannot Dismiss the fact that being consistent for four decades is a huge advantage. Nobody is surprised by what's going on. Everybody who comes to Hire at this point in time knows what to expect. So the consistency has served Hire very well. And I have to say that Hire has experimented. continuously over the last 40 years. And not all of the experiments have worked but they've always learned from what they've done, but they have never abandoned the basic elements of the operating system so that no one is ever being asked to jump into An abyss right to take a chance on everything. Always there's a banister to hold on to, it might be the performance management system. It might be the reward system. It might be the expectation of entrepreneurship. It might be the goal of zero distance with the customer. But those things are in place so that everybody understands how this works. Each experiment then is just an extension of what they've done. done in the past. I think that's a, an important part of how they do things.
Thomas Bertels:
00:12:54
It's interesting, right? Because the consistency is the change as the ongoing experimentation,? So that's unique. And I think the other piece, that's interesting about the higher model is to tap into. The entrepreneurial energy or potential of the organization. Can you maybe talk a little bit about like how hire sets that up?
Bill Fischer:
00:13:12
So these are people who are treated as entrepreneurs in reality as well as in theory, right? The organization today consists of Several thousand micro enterprises and those micro enterprises range in size. Some of them are actually not so micro. But they range in size. And within those micro and those micro enterprises have complete autonomy in terms of What they do, how they do it, how they incentivize their employees, how the, how they're structured, all of those sorts of things are at the, left to the discretion of the microenterprise. Going attracted to hire because you have entrepreneurial ambition through And the nice thing about this is that you can, I'm with the higher brand or the higher distribution channels and the like. So you're an entrepreneur, but, an entrepreneur with benefits like friends with benefits, entrepreneurs with benefits and you can take advantage of hires presence in the marketplace. But you're basically responsible for your ideas and how you execute them and how you bring them to the market. And so the entrepreneurial energy is really, is real, right? That they are they run their own shows And they profit or not on the basis of the returns that are generated. Their income is, and the income of their colleagues within the micro enterprises are based on their market performance. And I have to say that the way I understand it, and it's always changing, but the way I understand it is it takes three professionals. To come up with an idea that can launch a micro enterprise. They are supposed to be hosted on a platform. I'll come back to the platforms later because I think the platforms are learning mechanisms for the whole organization. But they're hosted on a platform and then they are, responsible for attracting people to work with them organizing those people in a way that makes sense creating a great customer experience. But if they don't, they'll fail, right? And so it's not that's a wish. That's a very strong market. Constraint if you don't perform in the marketplace is not only is it easy to start a micro enterprise, but it's easy to lose a micro enterprise. Okay. And and so they're relying truly on the energies and ambitions and insights of people within the firm. But Thomas what really is happening here is that part of the goal is zero distance with the customer. So the belief is that if you can get so close to the customer that you understand the needs that the customer has the jobs to be filled to use a business model terminology, if you can get that close. And you are nimble enough to respond to what you're learning which means you have to be small and fast moving, then in fact, you have a higher probability of succeeding in the marketplace. And we see that over and over again.
Thomas Bertels:
00:16:27
I find it super fascinating because I remember working with GE in the late 90s, early 2000s. And I think they came up with this concept at the customer for the customer. And it seems that hire has taken that and I gotten so good at that, that now actually GE Appliances is part of hire, right? It got taken over. So I find it. So I find it interesting. This idea of turning people into. Entrepreneurs inside an organization is not new, the idea of entrepreneurship, I think there's a book, from the 1980s, right? But Gifford Binshaw talked about this. And I had clients over the last 30, 40 years that wanted to, built an incubator, built an innovation lab utilize this idea of entrepreneurship. I don't think anybody has cracked the code on that. So I'm curious, that's in your view, what's different about how Hire has done it. Was, let's say, how a Silicon Valley company might do
Bill Fischer:
00:17:22
sure. And at this point, we ought to have a banner across the bottom of the screen that says warning, right? Doing this at home might be dangerous. And I would say that what we see at higher is an extreme. Okay so I think that that anyone who's inspired by this story needs to be careful as to how they go about doing it. But how they go about doing it is part of the success of what Hire has done. I believe it starts with zero distance to the customer. I believe it starts with getting as close to the customer as possible. have pursued every opportunity to get closer to the customer. And then acted on it. And so it's the smaller groups that are able to do that. I think that not interfering with what happens in the micro enterprises is part of the success of this whole thing. I can remember taking managers to Qingdao and people said, this is impossible. You can't do this in a complex organization with, at that time, 70, 000 employees. But what was going on was that those self organizing autonomous work groups were responding to Suggestions from top management. And at some point, John Raymond said, successful as this may be, it's not real entrepreneurship. The entrepreneurs shouldn't be responding to what we in headquarters think they ought to be responding to what the customers think. And so they reorganized once again to get even closer to the customers. So it's this absolute commitment To not doing anything halfway, not compromising for the convenience of headquarters but insisting on pursuing the needs of the customers. I think that's part of it. And then the third part that I'd like to mention is That, the value creation piece. We have always talked about value creation and value capture. And value creation has always been about innovation, and value capture has been about the value created for customers and the shareholders. The entrepreneurs are never mentioned in this. And so what Zhang Ruimin has really introduced into that dynamic is value distribution. Let's make sure that the people who actually come up with the ideas receive entrepreneurial rewards commensurate with the risks that they're taking. And so when you start that micro enterprise with your two colleagues and you find a platform to host you, almost always you're responsible to provide the seed capital as well. The risk is being borne by the entrepreneurs just like it would be anywhere else. Hire just makes it a bit easier for them but hire will invest in an organization if it sees promise, merit in the ideas or in the early market success, but the risk is largely borne not by the organization, but by the individuals. I think there's coherence in this operating system, right? It's faithful to visions, and yet it builds an operating system that, that. Gives that vision a better chance of being achieved.
Thomas Bertels:
00:20:54
what I love about it is that it's externally focused, it's about getting close to the customer, zero distance finding a need, And staying true to that idea, versus saying, yeah, we got to make the customer happy, but we also have corporate interests you got to
Bill Fischer:
00:21:10
I, it's completely outside in. And every time I talk about hire to a group of executives, inevitably somebody says we could never do that because our measurement system doesn't fit that. Or, our structure doesn't fit that. But that's about us, not about the customer. Yes.
Thomas Bertels:
00:21:29
So one of the reason why I think the higher stories are interesting is that this organization has grown tremendously over the time period that we're talking here. So what can hire teach us about? Scaling a business, Because on the one side, you can see, gee, if I start all these little entrepreneurial ventures, they're all going to compete for the same resources. That becomes really difficult. And I think a lot of companies, IGE famously, you want to be number one, number two in your industry, ignore everything else, so what's highest secret sauce when it comes to scaling?
Bill Fischer:
00:22:02
I think one of the things is that everything it does is clear enough so that everybody understands what they're trying to do and what the parameters on on on how they can act when I have CEOs come into my classroom and say, Professor Fisher, I'm told wants everything clear. So here's a clear. We're gonna be number one. It takes us two or three days to recover. Nobody knows what number one means. People will say, I hear people all saying, did she mean revenues or income, or did he mean China? China couldn't be that it's a special market, so what higher is done has If you want provided extreme clarity in how this system works, right? For better or worse, this is the way it works. This is how you form your organization. This is where the funds come from. There's a mystique about the organization or a myth. But what we've found is the myth is pretty legitimate. I think that There's very little compromise in how they go about this. that's hard to do in most organizations because you have so many multiple stakeholders. But Hire has remained consistently faithful. It helps to have support at the top. And over time hire has become not only a customer brand, but an employer brand. So people come to hire because they want to do these things. They're risk takers or risk makers. And so they want to come to hire because they see that's an opportunity to do it. So I think that it's the consistency and the coherence and the clarity that make this work.
Thomas Bertels:
00:23:42
There's also, I think, another mechanism when you and I were talking earlier I think you quoted Nolan who runs GE
Bill Fischer:
00:23:49
Yes.
Thomas Bertels:
00:23:50
I think we said we get bigger by getting smaller, right? So I think there's like an interesting division of cells model for growth here.
Bill Fischer:
00:23:57
yeah, what Kevin Nolan, the CEO of GE Appliances, which is now part of the Hire Group. Incidentally, the way the Hire Group has grown as a group has been both by The mechanism we're going to talk about in a minute, and also by acquisition. So they've acquired Fisher Paykel in New Zealand, and they've acquired the Sanyo business in Japan, and the General Electric business in Kandy in Europe. But once they've acquired them, they have encouraged, not demanded, but encouraged that these organizations Adopt. The Druckerian philosophy that we talked about earlier. Interestingly, it's been harder for them to do it because they don't have this 30 year ramp, and and because they have organized labor, contracts which constrain what they can do and can't do and the like. In each case they're on their way. The way the organization, Scales is by if you and I are members of a micro enterprise and we're seeing that something that we're doing is particularly interesting to the customer or that there are things that we could do differently that the customer would appreciate. We have the opportunity of starting our own microenterprise to pursue that, so we'll hive off from the original microenterprise and start a new microenterprise to pursue that new business model. In some cases, the microenterprise, the original microenterprise might say, no, that, that's really an extension of what we're doing, but typically in adjacencies, it's possible to start your own new microenterprise to pursue that. And what I see happening in that regard is that you're changing the way in which the organization grows in a very profound way. I told you I was watching your interview with Dot Lindsley from Google about how organizations grow and the like and the role of middle management. So one of the things that I think Haier has done very well is to change middle managers into leaders. Okay, rather than bookkeepers or monitors or whatever a middle manager tends to be they have given middle managers the opportunity to really take full advantage of all the things they know and to be able to run organizations or be part of a leadership team of microenterprises that, Pursue new ideas. There's a young woman named Lisa Gill, who has been very interested in transformation, and she used the term leader full. And I think that they're building organizations that are leaderful. I think that Haier has more leaders per capita within their organization than any other organization because they're not doing middle management things. They're really running their own small enterprise in the hopes of becoming a bigger enterprise, right? And so one of the things is that many of these successful microenterprises have begun to IPO, and then Haier has the opportunity to remain engaged as a shareholder or not, and they are off and running in their own businesses for real.
Thomas Bertels:
00:27:21
I think it's very interesting. It reminds me of Gore Tex, right? I think they were famous for that. Every time the organization grew to 200 people, right? They were divided in half and the two pieces would continue to grow. And I've also seen that I used to work at ABB, right? It was a similar model. We break the company.
Bill Fischer:
00:27:38
right?
Thomas Bertels:
00:27:38
Yeah, 5, 000 profit centers, right? And, so you unleash that entrepreneurial energy. What I also have seen is that the pendulum swings back and forth, And so that comes to the point where the bean counters come in and say all these micro enterprise, they're going to have a head of marketing, a head of HR, head of finance. If we put them all together, we just need one person who runs this, right? It's going to be so much cheaper. And I think a lot of companies have fallen into that. And it's they hollow out like those entrepreneurial structures to get the efficiencies. I'm curious as to like how hires model has evolved over time and maybe how they've been able to avoid what seems like a natural tendency.
Bill Fischer:
00:28:18
So the beam counting takes place at the microenterprise rather than above and strategy takes place at the microenterprise rather than above. And that change your perspective really has a profound difference on the way in which the organization thinks about what's too much and what's not enough, right? That what's too much and what's not enough is occurring. for your time. at a much lower level. At GEA, General Electric Appliances they've done away with the central office of strategy because strategy is being made at the microenterprise level. The microenterprise has complete autonomy, all microenterprise, hire and fire, make strategy and reward workers. You're, you don't have a lot of the conflicts or excess, the presumption of excess is that people doing the same thing different places is unnecessary. But here, they're doing it for their own, business, right? And so it takes on a very different feeling. And those three rights are really quite important. They're enshrined in people's minds. They're simple, right? And so you I run across people doing this all the time,
Thomas Bertels:
00:29:27
It suggests that you need that pass consistency. And I guess higher has been doing this for so long that people are not sitting on the fences, they've seen enough data points to confirm that, The rules are not going to change.
Bill Fischer:
00:29:43
That's exactly right. And we know how they work and there are no fences to sit on. You're either in a microenterprise or you're not. And so let's say I'm a and I'm an HR or legal. Or I. T. I have a microenterprise of my own. It's customers or the other microenterprises that are client facing, but I'm client facing too, because my clients are these microenterprises that need professional assistance. I don't think it's, that's fair anymore to use that term customer facing, but I'll do it because I think it's understandable. Enterprises that are serving clients are not required to rely on internal professional help. They can get it outside or inside depending on how competitive the offerings are.
Thomas Bertels:
00:30:30
so it's not, we're here from corporate, we're here to help you.
Bill Fischer:
00:30:33
That's right.
Thomas Bertels:
00:30:33
We're here from corporate, we got a product to sell, but you don't need to buy
Bill Fischer:
00:30:37
Yes. Yes.
Thomas Bertels:
00:30:38
you've seen it over a long period of time, right? You had some recent fallout conversations. How has the model evolved? We talked a lot about what stayed the same, but what's changed over time?
Bill Fischer:
00:30:51
of Corporate interference. They've tried all sorts of models, strategic business units and matrix organizations and stuff like that. But there was always a very heavy top management involvement. And then they went to this Self organizing autonomous work groups, which looked very entrepreneurial from the outside, but they were still being influenced by senior management as to what projects to pursue. And did they have seed capital and things like that? I think the most recent a, of this of hires. Pursuit of zero distance. The customer is that the present micro enterprises are really much more independent. There's a high mortality rate to with them. Okay, they're much more independent than they've been in the past. So all of that is constant experimentation, right? There's also been the opportunity to bid for leadership positions in microenterprises that appear to be underperforming. So a lot of the performance data Is available on the intranet, on the higher intranet. And you can bid for leadership positions based on your belief that you can do a better job. So that's, we'll see how that works, but that's an extension of this model. One of the things I'm interested in, particularly in the adoption of ecosystems as a way to grow, is that hire has decided that or recognized is a better word than decided. Hire is recognized that as technology evolves, the customer is better informed than ever, and their expectations for the customer experience are more, more demanding than ever. So it's closer. It's imperative to be closer to the customer, but it's also important to realize that hire is rapidly moving faster than its stock of expertise. I used to be told that The customer journey was 15 minutes every 15 years. That's an exaggeration. But the idea of being the customer walks into the showroom, the salesperson shows them a refrigerator. If they like it, they'll buy it. They'll come back in 15 years for another one. Now. I'm told that with four cameras in the refrigerators and, ubiquitous connectivity, the internet of things in the kitchen, that some customers are talking to hire 10 or 15 times a day and what they want are things that hire is not prepared to provide like what's in my refrigerator, right? Or what can I do with what's in my refrigerator? China has had a lot of food problems. What is the provenance of the products that are in my refrigerator? So all of a sudden, Haier finds itself in the recipe creating business and the food monitoring business, and that's something they've never done. And so what they are doing is entering into these ecosystems. I almost said creating the ecosystems. I think to be fair, Haier probably has created the ecosystems, but I sense that Hire recognizes, or the microenterprise managers who are really in the ecosystems realize that if they insist on these being Hire ecosystems, like Hire value chains, then they won't get as many ideas from their partners as if they view themselves as participants, equal participants with others in the ecosystems. Hire has more money. Hire has You know, there's all sorts of things that Hire has more of than bigger brand recognition than anybody else in the ecosystems. But if they use that to suppress idea creation, they're going to lose out. So what I think Hire is trying to do is to bring the spirit Drucker into the ecosystems so that they are part of A group that has access to unfamiliar expertise. Okay. And can use it when they need it and ignore it when they don't. And so I think that's more interesting because these other organizations, they also have visions for where they wanna go. And and they also have brands and intellectual property that they need to protect. It's a. complex future that hire is getting into. But one, if they can adapt to it, will be very rich in terms of how they can take the customer experience forward.
Thomas Bertels:
00:35:26
What I find interesting about this is because it actually increases complexity, right? You have all these micro enterprises, all these entrepreneurs that have their own. So it seems counterintuitive
Bill Fischer:
00:35:38
in the early days of general systems theory, Ross Ashby had the Laura requisite complexity. I think that was what it was called. And the idea being that, an idea ought to be as simple as it can be, but it shouldn't be simpler than the complexity of the problem that it's trying to deal with. And so I think you're absolutely right. The complexity is growing because of the customer experience becoming more complex, and and that's interesting. And I think that's exactly the right direction to go with.
Thomas Bertels:
00:36:10
I love the paradox, right? I remember growing up with the idea of like lean manufacturing, right? This idea of a lot size of one, right? One piece flow. And I had all these pharma clients who said Oh my God, one, it makes no sense, we got to I do a big batch and get the fiscal fixed cost absorption and proven out it's a superior Yes. but it's counterintuitive Yes. Yes. and I think the higher models like fits into the same category, it's counterintuitive to say we can have 10, 000 entrepreneurs out there little businesses that add up to this behemoth,
Bill Fischer:
00:36:44
let's just for a minute, go back to the platforms in the so one of the things I think happens is that the hire is organized, has organized the micro enterprises around platforms and the platforms, you can think of the platforms as being largely affinity seeking, right? So you have, biomedical platform and which deals with hospitals and as clients and the like. And you have a refrigerator, dining as a platform, and you have laundry, clothing care. Laundry actually has morphed into clothing care. Refrigerators have morphed into dining, what's happening there is first of all Since the micro enterprises that are Hosted by these platforms are in the same general client base, serving the same general client base. They can share ideas about the clients and learning that, that nobody else has. John Hagel has spoken about Scalable learning becoming more important than scalable efficiency, and I think that what we're seeing at higher is an attempt to create scalable learning by sharing ideas rather than sharing, efficiencies. So that makes, I think, the platforms very important but they won't be important if they become administrative. Administrative. Organizations. So I once interviewed a platform I don't know what the right term would be, but a person who worked in the platform, not in the microenterprise, but worked on a platform. This person had told me that he had been drawn to hire because of the entrepreneurial energies in them. He himself was an entrepreneur. So I said, I want to know how can you be an entrepreneur and be on the platform and not be in the micro enterprise? And he said, I'm learning. This is a learning experience. I'm learning about the industry. I'm learning about what makes for successful micro enterprises. Cause I have this perspective now on both the industry that we're serving and the micro enterprises are doing it. And he says, and I'm also investing. my own capital into the micro enterprises as a basis of being on the platform. I've never heard anybody anywhere ever say that before. I thought that was interesting in the way in which it worked. So I think that the platforms get relatively little attention, but they're interesting because of scalable learning and because they offer learning that is just unavailable probably anywhere else.
Thomas Bertels:
00:39:14
So it really operates a little bit more like a venture capital firm, Yeah. Yes. Yes. People can look at hire and say, that's too crazy for us, right? Or it's just too foreign for us, right? Maybe works in China, maybe it doesn't work here, We're not that entrepreneurial or willing to, right? Double down on it. So However, I think one other way to look at the highest story is that it's an idea hunting story. And you've written a book about idea hunting, The curiosity of leaders to find new answers to existing problems, right? Maybe talk a little bit about your experience was like, what distinguishes like people that are effective idea hunters? From the rest of it, and maybe what can people take away from that, but maybe it's less scary than the higher story.
Bill Fischer:
00:40:00
So I'm a great believer that the future is going to be a war for ideas, right? Maybe it's already a war for ideas. War is too strong a term, but it's going to be a pursuit for ideas. We see it already in the competition in artificial intelligence. It's been around for a long time. This is not a new idea, but I think it's gaining currency with what's happening. And I think that most of the organizations that we belong to interfere with that idea that fascination with ideas. They suppress curiosity in deference to efficiency. You go into an executive education classroom, 40, 50 people in the room. They're interesting. They're fascinating. They have great experiences. They're ambitious. They're energetic. It's a pleasure. It's a great way to work because they're so engaged. Then you look at their work situations, and their work situations are very different, right? Their work situations don't allow them to be as curious, so they don't appreciate that energy. They're they're afraid of their ambition. And what we have are organizations that are misfit for the world, for the time we live in. Among the things we were interested in the idea, Hunter, was Organizations and leaders who did a good job of fostering curiosity and then built organizations where idea flow was rich and fast and people were wanted for good ideas. And I think that, to an extent, Heyer has done that. I think, Peter Drucker was a great believer in knowledge work and turning knowledge work into material success and I think that's what Heyer has been doing. If you recall the Percy Bonovic years at ABB or if I go back to Lars Kolen at Oticon, there was a burst of Energy, that came about as a result of some of the initiatives that were taken. And I think many of the organizations that I work with need that sort of revitalization. I see the idea of Hunter work and what's going on at higher as being very much connected. in the sense that they do prize curiosity, they make it an asset rather than a disadvantage. They try to they think better about their, employees than other organizations do, if you're an employee of hire, one of the things that you see is this organization, not only trust you to do your job, but trust you to grow out of your job, right? To grow into something even more interesting than what you were when they originally hired you. And and they make that possible by the way in which you can hive off from work, by the autonomy of the micro enterprises, by the rewards and things like that. So I think. I think that what we're seeing is one variation on that Idea Hunter theme. I've always been fascinated by how ideas move through organizations. Very simple managerial choices Change the flow of ideas within the organization. You think about the platforms and the micro enterprises and that. And as a result, you have a an organization that is Regularity, right? Value chains are variance reducing. We don't want anything to go wrong. No screw ups. Ecosystems are variance enlarging. We're pursuing opportunities in value chains, if you do what we tell you to do, which is limiting, if we tell you what we want you to do, then we'll pay you fees based on quality and performance. In ecosystems, if you have good ideas, maybe we can share them and we'll share the rewards as well. There's a very different mindset involved in this. And I think, very much a growth mindset in ecosystems. What I really like about the higher experience as a teaching mechanism is that you see the value of ecosystems, which many people see as very risky propositions. You see the benefits of ecosystems because It takes advantage of your being closer to the customer and gives you a better opportunity to create a more interesting customer experience, so the whole thing comes together as a coherent story, a natural, coherent story, rather than reducing opportunities, intellect, curiosity, and the like,
Thomas Bertels:
00:44:26
one other thing I find is interesting about this, that it's also less direct control. I remember Nolan talking about that, right? Kevin Nolan, where he said it's I might see there's an idea. I think it's a dumb idea. I can't stop it. I, as a CEO, don't have the power to stop a dumb idea from being implemented.
Bill Fischer:
00:44:44
Let me give you an example. They grew out of the washing machine business and the like and in washing machines. The first microenterprise and ecosystem, because they were combined, that grew out of this, was in serving cleanliness and the maintenance of exotic fabrics. I think if we were a corporate strategy group in washing machines, the last thing we would be thinking about is Hermes scarves and, and Birkenbags, we would be thinking about, all sorts of stuff that has to do with the washing machine. But apparently, someone in the clothing business had always recognized that one of the, sectors, if that's the right term, that was going unattended to was these fine, expensive products that were difficult to clean. And the way this happened, the way this was expressed, was a children's clothing retailer had was putting in as a showcase for a microenterprise within the laundry business, a washing machine that had all different types of exotic cycles, and they reported back to hire. I was using that physical location to demonstrate this new product. People came in were fairly wealthy. People was an expensive store. They had children and what did they complain about? They didn't complain about washing the children's clothes. They complained about I can't get the spot out of my scarf what somebody in hire saw was there was a market here that was underserved, and they joined into a partnership with a cleaning salve manufacturer in Belgium, and and I think, a couple of the big detergent companies, and eventually they came up with several solutions to cleaning these exotic nobody in corporate strategy would Ever think about that. I don't think but these guys saw it and they started their own micro enterprise. And I don't know how big that market is. But that micro enterprise is doing very well. And the flip side of that is About a year ago, I was in the suburbs of Qingdao at a factory that made washing machines, and the manager, who was a production manager he was running a big factory he said that at night he went home and he read the printouts from the smart washing machines, and he saw that even though they could put as many as 200 different cycles into these machines, that you 10 or 20 percent of their customers were only using one cycle. And that was a lot of people, so he said he was on his own volition. He was producing test products to serve that single market. of, one cycle, short cycle, I was fascinated by the fact that this guy would do that, and I was in the car with two interpreters who I knew very well, and I said to them, What do you think about that? And they said, Yeah, that's us. That's all we do. We get home, push the button one cycle and and, so it works both ways. It can give you small niche markets that might be very interesting because of the premiums that you could charge, but it also gives you mass markets that are there. And, there's a fellow at the Sloan School Eric von Hippel, who's written about, Eric's work is, has been very interesting for a long time, looking about user led innovation. This was, these are user led innovations, right? And they, and most organizations may have one in a lifetime. Here we have two in a couple of years and more actually after that. So I think it's a very interesting mechanism, faithful to Drucker. To develop new business and new leaders.
Thomas Bertels:
00:48:41
I think it's a couple of things that I think most leaders would kill for, right? You have employees that are curious, right? This factory manager probably if he worked at Whirlpool, probably would not have to read through the downloads of the washing machines at night, So you have the curiosity there, but you also have the ability to act on that. Because I would imagine that there's plenty of people with good ideas and large companies, but by the time that they get to pitch their idea to the person who can actually give them the money the lemon has been squeezed dry, right? There's nothing left and, people killed all the innovation. So I think it's about curiosity, but also allowing people to act on that immediately, not ask for permission, but rather find two other people. Form a micro enterprise and then reduce the friction of getting capital and getting this launched and getting into the market through the platforms, right? So it's this combination of curiosity, motivation to do something about that, and the ease of use of a basic platform. Are those like in your views, like the three things that people should take away from hire that they can apply no matter what make it easier for people to do this, or would you take other lessons away?
Bill Fischer:
00:49:53
Silence. Silence. He writes a lot about work. And he has this idea of work, or workplace and what what being done at hire is he changes the way work is done. So now that going home at night and reading these things is part of work. That's, that's an accepted or going out and spending time with the customer is an accepted part of the job, but you can't do that unless you change. The worker and how do you change the worker? Giving them the confidence to go ahead and do this, reinforcing changing the measurements so that they're not being docked and performance management systems by taking the time to do this. The other thing he's done is change the workplace. We don't have departments answering to, a bureaucracy. We have small units working together. And so they've done this simultaneously. What I think, and I've heard, ironically, I've heard Jack Welch talk about this a lot, is that if you don't change all those things at the same time, you're going to get resistance. It's going to come from one of the unchanged areas, right? So you've got to be courageous enough. It takes real senior management courage to do this. That's one of the things hires done where I think that it goes well beyond the capacity of most organizations is that they did it throughout the whole organization. They didn't have pilot plants. They didn't have test. They did it all at once. And that certainly reinforces the message. I think it's been a very visual Acknowledgement that this is where we're going to go in the future, and this is how we're going to do it. And then, 40 years, trust builds up, right? It becomes part of the landscape. Trust is, we don't see it there, but the expectation is that this is going to work the way it's always worked. We may not get it right, but we're not going to, we're not going to go crazy, right?
Thomas Bertels:
00:52:05
So it's really hard to sustain these things. Do you think? Hire has a better shot than most other companies at doing this.
Bill Fischer:
00:52:16
Yes, I do. I think one of the secrets of successful disruption in an industry is that the disruptor makes disloyalty as easy as being loyal. And I think that what Hire does by being by zero distance of the customer is really at the center of this because what I think Hire is doing is it's understanding the customer's life faster, more completely than its competition. And then, as if that's not enough of an advantage, on top of that, it's giving the organization the opportunity to respond quicker. And with the ecosystems more completely. It's not easy to do this. I don't want to suggest that what Haier has done is easy. Experimentation is critical. You want to try things. You want to try new things because the customer's life is moving faster today than ever before. Because of AI and because of the internet of things and ubiquitous connectivity and stuff like that. And the ability to go back to your farmer example, the ability to offer individualized solutions to very, individual problems. Hire like everyone else needs to be constantly in touch with the customer and needs to be constantly trying things to see how they Fit within the customer's life. And I think they've been able to do that so far. So I think everybody generally Signs up for customer, excellent customer experience and entrepreneurship, although they're reluctant to make the organizational changes required, but very few people sign up to value distribution. We, very tough to do. Tough to do because the union contracts, prohibit how much variable pay you can give the worker for good reason, historically, but it doesn't fit necessarily well with the opportunities that are being created. So there's all sorts of reluctance to do things like that. And I think that what Hire has been able to do is to overcome those, that reluctance in the spirit of trying things,
Thomas Bertels:
00:54:29
I think that's very interesting. I think it requires a very mature leadership to sustain that journey and make that work.
Bill Fischer:
00:54:39
leadership is critical. It's ironic because To Less leadership and more leadership in the organization at the same time, right? Less leadership because the people at the top don't have the Authority that they might have in traditional organizations. More leadership because there's a lot more leaders at the micro enterprise level. I think that's healthy. There was another book before the idea of Hunter Andy Boynton and I wrote a book. Andy was coauthor on the idea of Hunter. Andy and I wrote a book called Virtuoso Teams, and we looked at teams that had changed their industry, changed the world, and they were all small teams. For the most part, the Manhattan Project might not have been, but everything else was small teams and they were run by leaders who might not have had the opportunity to do this in a more conventional organization. But what they did was they unleashed curiosity and they unleashed energy I've always been fascinated by more organizations don't do that. But. But they don't, right? Maybe this conversation will encourage people to lean into Let's hope. I want to go back, if you don't mind, quickly, the interview you had with Dot Linsley, because there were a couple of things that were said that I thought was interesting. Dot talked about, in so many organizations, we talk about middle managers as things, and we don't see them as whole people. And I think what HIRE is doing is giving individuals the opportunity to be whole people. I think that, and you said in response to that, you think that there's a crisis of middle management that you see in the organizations around us. I think I would argue HIRE is exempt from that crisis of middle management because it doesn't have middle managers in the classical sense of the term. When they went through this process of creating the micro enterprises, they said to the middle managers, you can stay on if you can find a job right in one of these newly forming. Or self forming autonomous work units, or you can leave. And quite a number of them left, but not all of them did. And I see some of the people who stayed on who are playing important roles in micro enterprises based on what they knew. They knew a lot of stuff. The tacit knowledge that they had from years of being middle managers is now serving the organization probably better than it ever has. And it's certainly serving them as well. As individuals. Because they're in a different type of, they have different responsibilities, right? Dart felt enormous responsibility for the individuals who worked for him for their lives and for their experiences. I thought about how would I say that in higher, and my sense is that you would change that to say, We had enormous opportunities. That's different than, so in the spirit of growth, right? We had enormous opportunities rather than enormous responsibilities. I think that, I think it's interesting how that works. And I think that it's just changing the perspective of the same people, putting them in different positions, treating them differently, rewarding them differently.
Thomas Bertels:
00:57:53
Yeah, although I think you could argue that the senior leadership mindset philosophy obviously makes a huge difference, I think one of the reasons why he felt that responsibility is because in these large organizations that people are always on the shopping block. And so I was curious about one thing you said that people can apply for leadership roles in a micro enterprise that currently somebody sits in. Now, on the outside, I would think this is like the worst like dog eat dog world. Scenario where you always got to be on the lookout for somebody gunning explicitly after your job actually being able to put in an application. And I'd be curious just like how you reconcile that.
Bill Fischer:
00:58:36
In the reincarnation of hire before the present one, where they were in these self forming autonomous work groups we called them ZZJYTs to abbreviate the Chinese term those organizations voted every quarter to see if they wanted to keep The leader. And they had a term that they referred to as catfish. And the they had a catfish in every unit. So the term comes from the Nordic seamen who would go out fishing for herring and they would apparently, I never knew this before, but they would put a catfish in every barrel because They wanted to keep the herring active. They didn't want the herring to die. There's no market value in dead herring. And so they would put this catfish in to keep the herring moving. And so they would Elect a catfish in these ZZJYTs so that the leader knew that if my team votes me out, we have a leader to to succeed me. My understanding is the managers of microenterprises today still operate at the pleasure of their team. So the team can. Vote them out. Okay, but I do not know if they still have catfish, but when I said, I don't think that would ever work in the West. so work at hire is not stressless. Okay. It's because the opportunities are high and the people that go to work for hire respond to those. stresses. People who love hierarchy and authority don't do well at hire and people who love to pursue their own way do well. And that's why hire after 40 years of doing this as an employer brand, nobody shows up at hire and is surprised by what's going on.
Thomas Bertels:
01:00:36
I think it's just a fundamentally different value proposition, Absolutely. Yep. right? Publicize product. High autonomy, high responsibility versus no autonomy, limited responsibility.
Bill Fischer:
01:00:49
Yeah. Yes. And I think that's an interesting way of going about staffing an organization.
Thomas Bertels:
01:00:56
I did an interview with Bill Passmore and and he said autonomy is the price we pay for a job in an organization, what we give up I thought it was a really interesting statement. This conversation brings it back full circle.
Bill Fischer:
01:01:12
Silence. Reaves has been doing out at the Henderson Institute, one of the things is that in the US, in Western Europe too, I'm sure mature Organizations lack vitality. Okay. And when you lack vitality, you lose the curiosity, you lose the novelty, pursuit of novelty, things of that nature. What you don't want to do is you don't want to do something that sparks curiosity in the pursuit of novelty and then fail to execute on that. You don't want to hire smart people and put them into a dumb organization because then you'll have angry smart people. Better to leave it as it is. so. I think what Haier has realized is that. Vitality, organizational vitality is important. the traditional organizational structures are complicit in reducing vitality. We think people will flourish with autonomy rather than not, right? And so the cost of losing autonomy is pretty high. Autonomy at Hire is dependent on the pursuit of great customer experience, Let's never forget that, right? Great customer experience is the goal. entrepreneurship is what we believe will get that. Autonomy is commensurate with entrepreneurship. these things fit together in a logical fashion. That's why I think you have to change all of them at the same time. I don't think we can create micro enterprises without giving them the autonomy to take advantage of being able to be close to the customer.
Thomas Bertels:
01:03:02
I think the other reason why I think it probably works for higher is that it's. Outside in because I've seen where we're trying to build an organization that's good for the people and it just never
Bill Fischer:
01:03:14
Yeah, we I was part just a couple months ago, I was part of a small panel at a conference, and I think we had 10, 10 or 15 people all together, and we did the same panel two days in a row with different participants, and the first day, we told the participants what they should know. It was a disaster. The second day we asked the participants what they were interested in and it changed everything. Just changing the way in which people in a room relate to one another. Either can create magic or not. And I think that's part of what they're trying to do at higher. The fact that they're doing it on such great scale is interesting. And I think that requires them to change everything at the same time so that some units are not in limbo as to what's going on.
Thomas Bertels:
01:04:04
I think it also creates a little bit codependency. We either all succeed or we all fail because everybody, is part of that process.
Bill Fischer:
01:04:15
though, that you and I are responsible for funding the capital risk involved with our new idea. So if I fail, you're not. Affected. Okay. Yeah, it de wristed for the enterprise, Yes. And I think these organizations have been around, the hierarchical organization, the pyramid organization has been around since Julius Caesar at least, and everything else in our lives have changed. Why are we not changing the way we organize to be better suited to the world around us, the technology available to us. And when I see big organizations take that pyramid and break them down into small pyramids, they missed an opportunity.
Thomas Bertels:
01:04:56
I know we could continue this conversation for another hour I really appreciate you. You're incredibly generous with your ideas and your experiences. So thank you so much for coming on the show.
Bill Fischer:
01:05:06
Thanks. It's been great. Thank you for me too.
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01:05:10
We hope you enjoyed this discussion. If you did, be sure to subscribe, like, share, or comment. Until next time, let's make work matter.
00:00:00
You don't want to hire smart people and put them into a dumb organization because then you'll have angry smart people. Better to leave it as it is. What Haier has realized is that organizational vitality is important. Traditional organizational structures are complicit in reducing vitality.
undefined:
00:00:20
Yeah. Yeah. Yeah. Yeah. Yeah. Welcome to Work Matters, where we explore what leaders can do to make work more productive, valuable, meaningful, and impactful. I'm your host Thomas Les. The Chinese company hires a manufacturer of home appliances that over the last 40 years has developed unique and very successful operating model. In this episode, I have the pleasure to talk to Bill Fisher, who has followed the highest story up close about how the company operates and what we can learn from it. Bill is a well-known expert in innovation management. He has taught at Premier Business School such as MIT and IMD, and he is the author of several books, including Virtu of Teams, the Idea Hunters and Reinventing Giants. In this episode, bill takes us through the evolution of hire from local Chinese refrigerator company to global innovator. He explains the principles at the core of its success, zero distance to the customer and entrepreneurship. And shows us how higher users, microenterprises, and platforms to bring these principles to life. The higher story is a fascinating case study for how even large companies in established industries can tap into the power of entrepreneurship. If you like this conversation, please subscribe so you never miss an episode. And now without further ado, he has my conversation with Bill Fisher.
Thomas Bertels:
00:01:51
So I'm super excited to have a new friend on the podcast, Bill Fisher. I met Bill at the Drucker Forum, I think maybe two years ago,
Bill Fischer:
00:01:59
Yeah. We're hardly new friends, Thomas. We've known each other for at least three or four years, right? For a bit for a bit. And you're known for a number of things, including I think your book idea Hunter. But you also worked a lot with hire or you spent a lot of time understanding hire. And there's no shortage of great innovation stories, but there's not a whole lot of companies that actually. Turn that into a sustainable track record, right? That we're able to sustain that. And Hire is one of those. And you had that some unique insights there. So that's one of the stories that we want to jump in. Could you maybe just take us back? Like, how did you first get involved with Hire? Can I preface this for a second by saying, I, I I have spent my professional life in executive education and and in the, in class after class with well known successful companies, mature companies in mature industries, there's a need for hope, right? the people in the room are really Always inevitably interesting people, and they're ambitious and full of energy and the like, but they're in organizational traps that really constrain their potential, right? And showing them pictures of Silicon Valley, And kids running around in flip flops. That's not going to do it. So the thing about hire is that It's one of them, right? It's a large, complex, successful organization in a, in an old economy industry, or what used to be an old economy industry, and it's mature. So it resonates with these audiences. My interest in in, in Hire has been the fact that it's a really good way to connect with the audience. And I have to say that there's also a bunch of books out or coming out that keep the story fresh, right? So Umbergo Lago has a book about Hire Out that's just got out last year and and Janka, and I'm going to mangle her name, Cleaves, Grengs, she has a book coming out on anti fragility, and those are really interesting books for bringing the story up to date. Okay, so that, that's just a preface. How did I get interested in Hire? First got interested in organizational transformation in the early 90s when I moved to IMD. a friend introduced me to a company called, a Danish company called Oticon. They make hearing aids. And they had a new CEO named I have his book here. Hang on just a second. Our new CEO called Lars Kohland. And Lars came from outside of the industry. He was in the Danish Atomic Energy Commission. And he came into this old and smallish but very successful market leader and turned them upside down. No titles, no offices, no paper. It was really an amazing sort of thing. I went up there and wrote a case about it, became fascinated by it, and started thinking about how organizations might be redesigned. Okay, so that was the start of my interest, but a few years later, I had the opportunity to move to Shanghai and to become the president of the China Europe International Business School, SEIBS. And I was in Shanghai in 1997, I think it was, for maybe a couple of weeks, just trying to get established so that I could move my wife and I over. And one of my colleagues at SEIBS said to me, I've just been in Qingdao, and I've run across this organization that's doing really interesting things. You ought to go see it. And my colleague and I flew up and what we saw was extraordinary, right? Because what we saw was an organization it wasn't a state owned organization, it was a collective, which made it even more confusing. But it was an organization that had the ambition To compete against much bigger state owned enterprises and ultimately foreign enterprises, whirlpool and Bosch and Siemens and, Panasonic and GE that were thinking of coming into the Chinese market. And they were doing well. And they also had a brand which was becoming highly recognized within an economy where brands had not had any purchase on the customer imagination. Because there were no, except for a few, flying pigeon bicycles and Hero watches and Lucky. Lucky candy and stuff like that. There was chocolate white rabbit. There were very few brands in China. So this was a really interesting story on many dimensions. And I met the newly established general manager, managing director, I guess would be the right term. His name was Jiang Ruimin. He was a young man at that time. I was also a young man at that time, more or less. And he had this vision for an organization that was extraordinary that I had never heard. I, in the Chinese landscape, I had been working intermittently in China every year since 1980 at that point. So I had about, 17 or 18 years of experience on the ground in China. And and this was a new story. And so I kept up with this. When I moved back to Europe, I invited Mr. John to come to IMD and talk to our international alumni group. We wrote cases about hire and and so that was the prelude to this relationship. A couple things to establish. So Haier was led, not owned, because it was a collective, so it was owned at the time by the collective, the owners of the collectives that were put together to create this company. It had been called the Qingdao Refrigerator Company. Because it made refrigerators in Qingdao, and it was led by the municipal government the Light Industry Bureau. And Mr. Zhang had worked for the Light Industry Bureau as one of the people who was in touch with Hi, with what eventually became higher. And in 1984, when the manager when the managing director of higher left retire, I don't know, retired or resigned. They couldn't read. They couldn't fill the position. Nobody wanted to take over the position. It was an organization that was not in great shape. So Mr. John
Thomas Bertels:
00:08:20
So I'm
Bill Fischer:
00:08:21
left government employment and went to work as the managing director of this firm. And he had been involved in the early relationship between Haier and Liebherr, the German home appliance company, among other things, cranes and things like that. And so he had a feeling that Haier was better than it was Liebherr. Allowed to be or and he came and provided a vision, but more than a vision. He provided an entire operating system. You use the word operating system. The conversation we had in December, he used, he created a completely different operating system for the organization to give it a better chance of achieving the vision. Okay, so that's how this all started.
Thomas Bertels:
00:09:08
think one of the things that intrigued me about this story is that he was a Drucker fan, right? I think some of these ideas didn't come out of thin air, right?
Bill Fischer:
00:09:17
He's a very. Interesting person. One of the most interesting people I've ever met. Probably, certainly the most interesting executive I've ever had the privilege of meeting. Insanely curious. Interested in almost anything you're talking about as long as it has to, is in the orbit of improving his organization and its people. Or maybe reverse, its people and the organization. As managing director, he had the opportunity to meet a lot of people who were interested in change in in, in China and to Invite them in to share their ideas, and then he also had the influence within the organization to pursue those things, to execute on them. And so it was, one of those really interesting more than coincidence, one of those really interesting situations where the person who is attracted to the idea also has the opportunity to put them into action. And he was a former government employee, a bureaucrat, right? And a druckerian, as you said. So apparently there was a Drucker Society in Qingdao at the time, and I've been told that mr. Zhang gave a talk entitled Forever Drucker. I just find that absolutely fascinating. But, true to form, he has, over the 30 some odd years that I've known him, he has remained faithful to the ideas of Peter Drucker. As an organizing operating system method.
Thomas Bertels:
00:10:49
So let's unpack that a little bit, what do you think is at the core of Haya's success?
Bill Fischer:
00:10:54
So the leadership has been remarkable. Okay. And it has remained faithful to the original goals established which were very briefly a great customer experience. Entrepreneurship as the mechanism to unlock the energy and creativity to provide the customer experience and thirdly, sharing the value created. If you're going to Treat people as entrepreneurs, you should reward them as entrepreneurs. Those three things, and they came right out of Peter Drucker, the object of a business is to create and keep a customer, and entrepreneurship is the best way to do that. And I think that's part of it. Second part is, you cannot Dismiss the fact that being consistent for four decades is a huge advantage. Nobody is surprised by what's going on. Everybody who comes to Hire at this point in time knows what to expect. So the consistency has served Hire very well. And I have to say that Hire has experimented. continuously over the last 40 years. And not all of the experiments have worked but they've always learned from what they've done, but they have never abandoned the basic elements of the operating system so that no one is ever being asked to jump into An abyss right to take a chance on everything. Always there's a banister to hold on to, it might be the performance management system. It might be the reward system. It might be the expectation of entrepreneurship. It might be the goal of zero distance with the customer. But those things are in place so that everybody understands how this works. Each experiment then is just an extension of what they've done. done in the past. I think that's a, an important part of how they do things.
Thomas Bertels:
00:12:54
It's interesting, right? Because the consistency is the change as the ongoing experimentation,? So that's unique. And I think the other piece, that's interesting about the higher model is to tap into. The entrepreneurial energy or potential of the organization. Can you maybe talk a little bit about like how hire sets that up?
Bill Fischer:
00:13:12
So these are people who are treated as entrepreneurs in reality as well as in theory, right? The organization today consists of Several thousand micro enterprises and those micro enterprises range in size. Some of them are actually not so micro. But they range in size. And within those micro and those micro enterprises have complete autonomy in terms of What they do, how they do it, how they incentivize their employees, how the, how they're structured, all of those sorts of things are at the, left to the discretion of the microenterprise. Going attracted to hire because you have entrepreneurial ambition through And the nice thing about this is that you can, I'm with the higher brand or the higher distribution channels and the like. So you're an entrepreneur, but, an entrepreneur with benefits like friends with benefits, entrepreneurs with benefits and you can take advantage of hires presence in the marketplace. But you're basically responsible for your ideas and how you execute them and how you bring them to the market. And so the entrepreneurial energy is really, is real, right? That they are they run their own shows And they profit or not on the basis of the returns that are generated. Their income is, and the income of their colleagues within the micro enterprises are based on their market performance. And I have to say that the way I understand it, and it's always changing, but the way I understand it is it takes three professionals. To come up with an idea that can launch a micro enterprise. They are supposed to be hosted on a platform. I'll come back to the platforms later because I think the platforms are learning mechanisms for the whole organization. But they're hosted on a platform and then they are, responsible for attracting people to work with them organizing those people in a way that makes sense creating a great customer experience. But if they don't, they'll fail, right? And so it's not that's a wish. That's a very strong market. Constraint if you don't perform in the marketplace is not only is it easy to start a micro enterprise, but it's easy to lose a micro enterprise. Okay. And and so they're relying truly on the energies and ambitions and insights of people within the firm. But Thomas what really is happening here is that part of the goal is zero distance with the customer. So the belief is that if you can get so close to the customer that you understand the needs that the customer has the jobs to be filled to use a business model terminology, if you can get that close. And you are nimble enough to respond to what you're learning which means you have to be small and fast moving, then in fact, you have a higher probability of succeeding in the marketplace. And we see that over and over again.
Thomas Bertels:
00:16:27
I find it super fascinating because I remember working with GE in the late 90s, early 2000s. And I think they came up with this concept at the customer for the customer. And it seems that hire has taken that and I gotten so good at that, that now actually GE Appliances is part of hire, right? It got taken over. So I find it. So I find it interesting. This idea of turning people into. Entrepreneurs inside an organization is not new, the idea of entrepreneurship, I think there's a book, from the 1980s, right? But Gifford Binshaw talked about this. And I had clients over the last 30, 40 years that wanted to, built an incubator, built an innovation lab utilize this idea of entrepreneurship. I don't think anybody has cracked the code on that. So I'm curious, that's in your view, what's different about how Hire has done it. Was, let's say, how a Silicon Valley company might do
Bill Fischer:
00:17:22
sure. And at this point, we ought to have a banner across the bottom of the screen that says warning, right? Doing this at home might be dangerous. And I would say that what we see at higher is an extreme. Okay so I think that that anyone who's inspired by this story needs to be careful as to how they go about doing it. But how they go about doing it is part of the success of what Hire has done. I believe it starts with zero distance to the customer. I believe it starts with getting as close to the customer as possible. have pursued every opportunity to get closer to the customer. And then acted on it. And so it's the smaller groups that are able to do that. I think that not interfering with what happens in the micro enterprises is part of the success of this whole thing. I can remember taking managers to Qingdao and people said, this is impossible. You can't do this in a complex organization with, at that time, 70, 000 employees. But what was going on was that those self organizing autonomous work groups were responding to Suggestions from top management. And at some point, John Raymond said, successful as this may be, it's not real entrepreneurship. The entrepreneurs shouldn't be responding to what we in headquarters think they ought to be responding to what the customers think. And so they reorganized once again to get even closer to the customers. So it's this absolute commitment To not doing anything halfway, not compromising for the convenience of headquarters but insisting on pursuing the needs of the customers. I think that's part of it. And then the third part that I'd like to mention is That, the value creation piece. We have always talked about value creation and value capture. And value creation has always been about innovation, and value capture has been about the value created for customers and the shareholders. The entrepreneurs are never mentioned in this. And so what Zhang Ruimin has really introduced into that dynamic is value distribution. Let's make sure that the people who actually come up with the ideas receive entrepreneurial rewards commensurate with the risks that they're taking. And so when you start that micro enterprise with your two colleagues and you find a platform to host you, almost always you're responsible to provide the seed capital as well. The risk is being borne by the entrepreneurs just like it would be anywhere else. Hire just makes it a bit easier for them but hire will invest in an organization if it sees promise, merit in the ideas or in the early market success, but the risk is largely borne not by the organization, but by the individuals. I think there's coherence in this operating system, right? It's faithful to visions, and yet it builds an operating system that, that. Gives that vision a better chance of being achieved.
Thomas Bertels:
00:20:54
what I love about it is that it's externally focused, it's about getting close to the customer, zero distance finding a need, And staying true to that idea, versus saying, yeah, we got to make the customer happy, but we also have corporate interests you got to
Bill Fischer:
00:21:10
I, it's completely outside in. And every time I talk about hire to a group of executives, inevitably somebody says we could never do that because our measurement system doesn't fit that. Or, our structure doesn't fit that. But that's about us, not about the customer. Yes.
Thomas Bertels:
00:21:29
So one of the reason why I think the higher stories are interesting is that this organization has grown tremendously over the time period that we're talking here. So what can hire teach us about? Scaling a business, Because on the one side, you can see, gee, if I start all these little entrepreneurial ventures, they're all going to compete for the same resources. That becomes really difficult. And I think a lot of companies, IGE famously, you want to be number one, number two in your industry, ignore everything else, so what's highest secret sauce when it comes to scaling?
Bill Fischer:
00:22:02
I think one of the things is that everything it does is clear enough so that everybody understands what they're trying to do and what the parameters on on on how they can act when I have CEOs come into my classroom and say, Professor Fisher, I'm told wants everything clear. So here's a clear. We're gonna be number one. It takes us two or three days to recover. Nobody knows what number one means. People will say, I hear people all saying, did she mean revenues or income, or did he mean China? China couldn't be that it's a special market, so what higher is done has If you want provided extreme clarity in how this system works, right? For better or worse, this is the way it works. This is how you form your organization. This is where the funds come from. There's a mystique about the organization or a myth. But what we've found is the myth is pretty legitimate. I think that There's very little compromise in how they go about this. that's hard to do in most organizations because you have so many multiple stakeholders. But Hire has remained consistently faithful. It helps to have support at the top. And over time hire has become not only a customer brand, but an employer brand. So people come to hire because they want to do these things. They're risk takers or risk makers. And so they want to come to hire because they see that's an opportunity to do it. So I think that it's the consistency and the coherence and the clarity that make this work.
Thomas Bertels:
00:23:42
There's also, I think, another mechanism when you and I were talking earlier I think you quoted Nolan who runs GE
Bill Fischer:
00:23:49
Yes.
Thomas Bertels:
00:23:50
I think we said we get bigger by getting smaller, right? So I think there's like an interesting division of cells model for growth here.
Bill Fischer:
00:23:57
yeah, what Kevin Nolan, the CEO of GE Appliances, which is now part of the Hire Group. Incidentally, the way the Hire Group has grown as a group has been both by The mechanism we're going to talk about in a minute, and also by acquisition. So they've acquired Fisher Paykel in New Zealand, and they've acquired the Sanyo business in Japan, and the General Electric business in Kandy in Europe. But once they've acquired them, they have encouraged, not demanded, but encouraged that these organizations Adopt. The Druckerian philosophy that we talked about earlier. Interestingly, it's been harder for them to do it because they don't have this 30 year ramp, and and because they have organized labor, contracts which constrain what they can do and can't do and the like. In each case they're on their way. The way the organization, Scales is by if you and I are members of a micro enterprise and we're seeing that something that we're doing is particularly interesting to the customer or that there are things that we could do differently that the customer would appreciate. We have the opportunity of starting our own microenterprise to pursue that, so we'll hive off from the original microenterprise and start a new microenterprise to pursue that new business model. In some cases, the microenterprise, the original microenterprise might say, no, that, that's really an extension of what we're doing, but typically in adjacencies, it's possible to start your own new microenterprise to pursue that. And what I see happening in that regard is that you're changing the way in which the organization grows in a very profound way. I told you I was watching your interview with Dot Lindsley from Google about how organizations grow and the like and the role of middle management. So one of the things that I think Haier has done very well is to change middle managers into leaders. Okay, rather than bookkeepers or monitors or whatever a middle manager tends to be they have given middle managers the opportunity to really take full advantage of all the things they know and to be able to run organizations or be part of a leadership team of microenterprises that, Pursue new ideas. There's a young woman named Lisa Gill, who has been very interested in transformation, and she used the term leader full. And I think that they're building organizations that are leaderful. I think that Haier has more leaders per capita within their organization than any other organization because they're not doing middle management things. They're really running their own small enterprise in the hopes of becoming a bigger enterprise, right? And so one of the things is that many of these successful microenterprises have begun to IPO, and then Haier has the opportunity to remain engaged as a shareholder or not, and they are off and running in their own businesses for real.
Thomas Bertels:
00:27:21
I think it's very interesting. It reminds me of Gore Tex, right? I think they were famous for that. Every time the organization grew to 200 people, right? They were divided in half and the two pieces would continue to grow. And I've also seen that I used to work at ABB, right? It was a similar model. We break the company.
Bill Fischer:
00:27:38
right?
Thomas Bertels:
00:27:38
Yeah, 5, 000 profit centers, right? And, so you unleash that entrepreneurial energy. What I also have seen is that the pendulum swings back and forth, And so that comes to the point where the bean counters come in and say all these micro enterprise, they're going to have a head of marketing, a head of HR, head of finance. If we put them all together, we just need one person who runs this, right? It's going to be so much cheaper. And I think a lot of companies have fallen into that. And it's they hollow out like those entrepreneurial structures to get the efficiencies. I'm curious as to like how hires model has evolved over time and maybe how they've been able to avoid what seems like a natural tendency.
Bill Fischer:
00:28:18
So the beam counting takes place at the microenterprise rather than above and strategy takes place at the microenterprise rather than above. And that change your perspective really has a profound difference on the way in which the organization thinks about what's too much and what's not enough, right? That what's too much and what's not enough is occurring. for your time. at a much lower level. At GEA, General Electric Appliances they've done away with the central office of strategy because strategy is being made at the microenterprise level. The microenterprise has complete autonomy, all microenterprise, hire and fire, make strategy and reward workers. You're, you don't have a lot of the conflicts or excess, the presumption of excess is that people doing the same thing different places is unnecessary. But here, they're doing it for their own, business, right? And so it takes on a very different feeling. And those three rights are really quite important. They're enshrined in people's minds. They're simple, right? And so you I run across people doing this all the time,
Thomas Bertels:
00:29:27
It suggests that you need that pass consistency. And I guess higher has been doing this for so long that people are not sitting on the fences, they've seen enough data points to confirm that, The rules are not going to change.
Bill Fischer:
00:29:43
That's exactly right. And we know how they work and there are no fences to sit on. You're either in a microenterprise or you're not. And so let's say I'm a and I'm an HR or legal. Or I. T. I have a microenterprise of my own. It's customers or the other microenterprises that are client facing, but I'm client facing too, because my clients are these microenterprises that need professional assistance. I don't think it's, that's fair anymore to use that term customer facing, but I'll do it because I think it's understandable. Enterprises that are serving clients are not required to rely on internal professional help. They can get it outside or inside depending on how competitive the offerings are.
Thomas Bertels:
00:30:30
so it's not, we're here from corporate, we're here to help you.
Bill Fischer:
00:30:33
That's right.
Thomas Bertels:
00:30:33
We're here from corporate, we got a product to sell, but you don't need to buy
Bill Fischer:
00:30:37
Yes. Yes.
Thomas Bertels:
00:30:38
you've seen it over a long period of time, right? You had some recent fallout conversations. How has the model evolved? We talked a lot about what stayed the same, but what's changed over time?
Bill Fischer:
00:30:51
of Corporate interference. They've tried all sorts of models, strategic business units and matrix organizations and stuff like that. But there was always a very heavy top management involvement. And then they went to this Self organizing autonomous work groups, which looked very entrepreneurial from the outside, but they were still being influenced by senior management as to what projects to pursue. And did they have seed capital and things like that? I think the most recent a, of this of hires. Pursuit of zero distance. The customer is that the present micro enterprises are really much more independent. There's a high mortality rate to with them. Okay, they're much more independent than they've been in the past. So all of that is constant experimentation, right? There's also been the opportunity to bid for leadership positions in microenterprises that appear to be underperforming. So a lot of the performance data Is available on the intranet, on the higher intranet. And you can bid for leadership positions based on your belief that you can do a better job. So that's, we'll see how that works, but that's an extension of this model. One of the things I'm interested in, particularly in the adoption of ecosystems as a way to grow, is that hire has decided that or recognized is a better word than decided. Hire is recognized that as technology evolves, the customer is better informed than ever, and their expectations for the customer experience are more, more demanding than ever. So it's closer. It's imperative to be closer to the customer, but it's also important to realize that hire is rapidly moving faster than its stock of expertise. I used to be told that The customer journey was 15 minutes every 15 years. That's an exaggeration. But the idea of being the customer walks into the showroom, the salesperson shows them a refrigerator. If they like it, they'll buy it. They'll come back in 15 years for another one. Now. I'm told that with four cameras in the refrigerators and, ubiquitous connectivity, the internet of things in the kitchen, that some customers are talking to hire 10 or 15 times a day and what they want are things that hire is not prepared to provide like what's in my refrigerator, right? Or what can I do with what's in my refrigerator? China has had a lot of food problems. What is the provenance of the products that are in my refrigerator? So all of a sudden, Haier finds itself in the recipe creating business and the food monitoring business, and that's something they've never done. And so what they are doing is entering into these ecosystems. I almost said creating the ecosystems. I think to be fair, Haier probably has created the ecosystems, but I sense that Hire recognizes, or the microenterprise managers who are really in the ecosystems realize that if they insist on these being Hire ecosystems, like Hire value chains, then they won't get as many ideas from their partners as if they view themselves as participants, equal participants with others in the ecosystems. Hire has more money. Hire has You know, there's all sorts of things that Hire has more of than bigger brand recognition than anybody else in the ecosystems. But if they use that to suppress idea creation, they're going to lose out. So what I think Hire is trying to do is to bring the spirit Drucker into the ecosystems so that they are part of A group that has access to unfamiliar expertise. Okay. And can use it when they need it and ignore it when they don't. And so I think that's more interesting because these other organizations, they also have visions for where they wanna go. And and they also have brands and intellectual property that they need to protect. It's a. complex future that hire is getting into. But one, if they can adapt to it, will be very rich in terms of how they can take the customer experience forward.
Thomas Bertels:
00:35:26
What I find interesting about this is because it actually increases complexity, right? You have all these micro enterprises, all these entrepreneurs that have their own. So it seems counterintuitive
Bill Fischer:
00:35:38
in the early days of general systems theory, Ross Ashby had the Laura requisite complexity. I think that was what it was called. And the idea being that, an idea ought to be as simple as it can be, but it shouldn't be simpler than the complexity of the problem that it's trying to deal with. And so I think you're absolutely right. The complexity is growing because of the customer experience becoming more complex, and and that's interesting. And I think that's exactly the right direction to go with.
Thomas Bertels:
00:36:10
I love the paradox, right? I remember growing up with the idea of like lean manufacturing, right? This idea of a lot size of one, right? One piece flow. And I had all these pharma clients who said Oh my God, one, it makes no sense, we got to I do a big batch and get the fiscal fixed cost absorption and proven out it's a superior Yes. but it's counterintuitive Yes. Yes. and I think the higher models like fits into the same category, it's counterintuitive to say we can have 10, 000 entrepreneurs out there little businesses that add up to this behemoth,
Bill Fischer:
00:36:44
let's just for a minute, go back to the platforms in the so one of the things I think happens is that the hire is organized, has organized the micro enterprises around platforms and the platforms, you can think of the platforms as being largely affinity seeking, right? So you have, biomedical platform and which deals with hospitals and as clients and the like. And you have a refrigerator, dining as a platform, and you have laundry, clothing care. Laundry actually has morphed into clothing care. Refrigerators have morphed into dining, what's happening there is first of all Since the micro enterprises that are Hosted by these platforms are in the same general client base, serving the same general client base. They can share ideas about the clients and learning that, that nobody else has. John Hagel has spoken about Scalable learning becoming more important than scalable efficiency, and I think that what we're seeing at higher is an attempt to create scalable learning by sharing ideas rather than sharing, efficiencies. So that makes, I think, the platforms very important but they won't be important if they become administrative. Administrative. Organizations. So I once interviewed a platform I don't know what the right term would be, but a person who worked in the platform, not in the microenterprise, but worked on a platform. This person had told me that he had been drawn to hire because of the entrepreneurial energies in them. He himself was an entrepreneur. So I said, I want to know how can you be an entrepreneur and be on the platform and not be in the micro enterprise? And he said, I'm learning. This is a learning experience. I'm learning about the industry. I'm learning about what makes for successful micro enterprises. Cause I have this perspective now on both the industry that we're serving and the micro enterprises are doing it. And he says, and I'm also investing. my own capital into the micro enterprises as a basis of being on the platform. I've never heard anybody anywhere ever say that before. I thought that was interesting in the way in which it worked. So I think that the platforms get relatively little attention, but they're interesting because of scalable learning and because they offer learning that is just unavailable probably anywhere else.
Thomas Bertels:
00:39:14
So it really operates a little bit more like a venture capital firm, Yeah. Yes. Yes. People can look at hire and say, that's too crazy for us, right? Or it's just too foreign for us, right? Maybe works in China, maybe it doesn't work here, We're not that entrepreneurial or willing to, right? Double down on it. So However, I think one other way to look at the highest story is that it's an idea hunting story. And you've written a book about idea hunting, The curiosity of leaders to find new answers to existing problems, right? Maybe talk a little bit about your experience was like, what distinguishes like people that are effective idea hunters? From the rest of it, and maybe what can people take away from that, but maybe it's less scary than the higher story.
Bill Fischer:
00:40:00
So I'm a great believer that the future is going to be a war for ideas, right? Maybe it's already a war for ideas. War is too strong a term, but it's going to be a pursuit for ideas. We see it already in the competition in artificial intelligence. It's been around for a long time. This is not a new idea, but I think it's gaining currency with what's happening. And I think that most of the organizations that we belong to interfere with that idea that fascination with ideas. They suppress curiosity in deference to efficiency. You go into an executive education classroom, 40, 50 people in the room. They're interesting. They're fascinating. They have great experiences. They're ambitious. They're energetic. It's a pleasure. It's a great way to work because they're so engaged. Then you look at their work situations, and their work situations are very different, right? Their work situations don't allow them to be as curious, so they don't appreciate that energy. They're they're afraid of their ambition. And what we have are organizations that are misfit for the world, for the time we live in. Among the things we were interested in the idea, Hunter, was Organizations and leaders who did a good job of fostering curiosity and then built organizations where idea flow was rich and fast and people were wanted for good ideas. And I think that, to an extent, Heyer has done that. I think, Peter Drucker was a great believer in knowledge work and turning knowledge work into material success and I think that's what Heyer has been doing. If you recall the Percy Bonovic years at ABB or if I go back to Lars Kolen at Oticon, there was a burst of Energy, that came about as a result of some of the initiatives that were taken. And I think many of the organizations that I work with need that sort of revitalization. I see the idea of Hunter work and what's going on at higher as being very much connected. in the sense that they do prize curiosity, they make it an asset rather than a disadvantage. They try to they think better about their, employees than other organizations do, if you're an employee of hire, one of the things that you see is this organization, not only trust you to do your job, but trust you to grow out of your job, right? To grow into something even more interesting than what you were when they originally hired you. And and they make that possible by the way in which you can hive off from work, by the autonomy of the micro enterprises, by the rewards and things like that. So I think. I think that what we're seeing is one variation on that Idea Hunter theme. I've always been fascinated by how ideas move through organizations. Very simple managerial choices Change the flow of ideas within the organization. You think about the platforms and the micro enterprises and that. And as a result, you have a an organization that is Regularity, right? Value chains are variance reducing. We don't want anything to go wrong. No screw ups. Ecosystems are variance enlarging. We're pursuing opportunities in value chains, if you do what we tell you to do, which is limiting, if we tell you what we want you to do, then we'll pay you fees based on quality and performance. In ecosystems, if you have good ideas, maybe we can share them and we'll share the rewards as well. There's a very different mindset involved in this. And I think, very much a growth mindset in ecosystems. What I really like about the higher experience as a teaching mechanism is that you see the value of ecosystems, which many people see as very risky propositions. You see the benefits of ecosystems because It takes advantage of your being closer to the customer and gives you a better opportunity to create a more interesting customer experience, so the whole thing comes together as a coherent story, a natural, coherent story, rather than reducing opportunities, intellect, curiosity, and the like,
Thomas Bertels:
00:44:26
one other thing I find is interesting about this, that it's also less direct control. I remember Nolan talking about that, right? Kevin Nolan, where he said it's I might see there's an idea. I think it's a dumb idea. I can't stop it. I, as a CEO, don't have the power to stop a dumb idea from being implemented.
Bill Fischer:
00:44:44
Let me give you an example. They grew out of the washing machine business and the like and in washing machines. The first microenterprise and ecosystem, because they were combined, that grew out of this, was in serving cleanliness and the maintenance of exotic fabrics. I think if we were a corporate strategy group in washing machines, the last thing we would be thinking about is Hermes scarves and, and Birkenbags, we would be thinking about, all sorts of stuff that has to do with the washing machine. But apparently, someone in the clothing business had always recognized that one of the, sectors, if that's the right term, that was going unattended to was these fine, expensive products that were difficult to clean. And the way this happened, the way this was expressed, was a children's clothing retailer had was putting in as a showcase for a microenterprise within the laundry business, a washing machine that had all different types of exotic cycles, and they reported back to hire. I was using that physical location to demonstrate this new product. People came in were fairly wealthy. People was an expensive store. They had children and what did they complain about? They didn't complain about washing the children's clothes. They complained about I can't get the spot out of my scarf what somebody in hire saw was there was a market here that was underserved, and they joined into a partnership with a cleaning salve manufacturer in Belgium, and and I think, a couple of the big detergent companies, and eventually they came up with several solutions to cleaning these exotic nobody in corporate strategy would Ever think about that. I don't think but these guys saw it and they started their own micro enterprise. And I don't know how big that market is. But that micro enterprise is doing very well. And the flip side of that is About a year ago, I was in the suburbs of Qingdao at a factory that made washing machines, and the manager, who was a production manager he was running a big factory he said that at night he went home and he read the printouts from the smart washing machines, and he saw that even though they could put as many as 200 different cycles into these machines, that you 10 or 20 percent of their customers were only using one cycle. And that was a lot of people, so he said he was on his own volition. He was producing test products to serve that single market. of, one cycle, short cycle, I was fascinated by the fact that this guy would do that, and I was in the car with two interpreters who I knew very well, and I said to them, What do you think about that? And they said, Yeah, that's us. That's all we do. We get home, push the button one cycle and and, so it works both ways. It can give you small niche markets that might be very interesting because of the premiums that you could charge, but it also gives you mass markets that are there. And, there's a fellow at the Sloan School Eric von Hippel, who's written about, Eric's work is, has been very interesting for a long time, looking about user led innovation. This was, these are user led innovations, right? And they, and most organizations may have one in a lifetime. Here we have two in a couple of years and more actually after that. So I think it's a very interesting mechanism, faithful to Drucker. To develop new business and new leaders.
Thomas Bertels:
00:48:41
I think it's a couple of things that I think most leaders would kill for, right? You have employees that are curious, right? This factory manager probably if he worked at Whirlpool, probably would not have to read through the downloads of the washing machines at night, So you have the curiosity there, but you also have the ability to act on that. Because I would imagine that there's plenty of people with good ideas and large companies, but by the time that they get to pitch their idea to the person who can actually give them the money the lemon has been squeezed dry, right? There's nothing left and, people killed all the innovation. So I think it's about curiosity, but also allowing people to act on that immediately, not ask for permission, but rather find two other people. Form a micro enterprise and then reduce the friction of getting capital and getting this launched and getting into the market through the platforms, right? So it's this combination of curiosity, motivation to do something about that, and the ease of use of a basic platform. Are those like in your views, like the three things that people should take away from hire that they can apply no matter what make it easier for people to do this, or would you take other lessons away?
Bill Fischer:
00:49:53
Silence. Silence. He writes a lot about work. And he has this idea of work, or workplace and what what being done at hire is he changes the way work is done. So now that going home at night and reading these things is part of work. That's, that's an accepted or going out and spending time with the customer is an accepted part of the job, but you can't do that unless you change. The worker and how do you change the worker? Giving them the confidence to go ahead and do this, reinforcing changing the measurements so that they're not being docked and performance management systems by taking the time to do this. The other thing he's done is change the workplace. We don't have departments answering to, a bureaucracy. We have small units working together. And so they've done this simultaneously. What I think, and I've heard, ironically, I've heard Jack Welch talk about this a lot, is that if you don't change all those things at the same time, you're going to get resistance. It's going to come from one of the unchanged areas, right? So you've got to be courageous enough. It takes real senior management courage to do this. That's one of the things hires done where I think that it goes well beyond the capacity of most organizations is that they did it throughout the whole organization. They didn't have pilot plants. They didn't have test. They did it all at once. And that certainly reinforces the message. I think it's been a very visual Acknowledgement that this is where we're going to go in the future, and this is how we're going to do it. And then, 40 years, trust builds up, right? It becomes part of the landscape. Trust is, we don't see it there, but the expectation is that this is going to work the way it's always worked. We may not get it right, but we're not going to, we're not going to go crazy, right?
Thomas Bertels:
00:52:05
So it's really hard to sustain these things. Do you think? Hire has a better shot than most other companies at doing this.
Bill Fischer:
00:52:16
Yes, I do. I think one of the secrets of successful disruption in an industry is that the disruptor makes disloyalty as easy as being loyal. And I think that what Hire does by being by zero distance of the customer is really at the center of this because what I think Hire is doing is it's understanding the customer's life faster, more completely than its competition. And then, as if that's not enough of an advantage, on top of that, it's giving the organization the opportunity to respond quicker. And with the ecosystems more completely. It's not easy to do this. I don't want to suggest that what Haier has done is easy. Experimentation is critical. You want to try things. You want to try new things because the customer's life is moving faster today than ever before. Because of AI and because of the internet of things and ubiquitous connectivity and stuff like that. And the ability to go back to your farmer example, the ability to offer individualized solutions to very, individual problems. Hire like everyone else needs to be constantly in touch with the customer and needs to be constantly trying things to see how they Fit within the customer's life. And I think they've been able to do that so far. So I think everybody generally Signs up for customer, excellent customer experience and entrepreneurship, although they're reluctant to make the organizational changes required, but very few people sign up to value distribution. We, very tough to do. Tough to do because the union contracts, prohibit how much variable pay you can give the worker for good reason, historically, but it doesn't fit necessarily well with the opportunities that are being created. So there's all sorts of reluctance to do things like that. And I think that what Hire has been able to do is to overcome those, that reluctance in the spirit of trying things,
Thomas Bertels:
00:54:29
I think that's very interesting. I think it requires a very mature leadership to sustain that journey and make that work.
Bill Fischer:
00:54:39
leadership is critical. It's ironic because To Less leadership and more leadership in the organization at the same time, right? Less leadership because the people at the top don't have the Authority that they might have in traditional organizations. More leadership because there's a lot more leaders at the micro enterprise level. I think that's healthy. There was another book before the idea of Hunter Andy Boynton and I wrote a book. Andy was coauthor on the idea of Hunter. Andy and I wrote a book called Virtuoso Teams, and we looked at teams that had changed their industry, changed the world, and they were all small teams. For the most part, the Manhattan Project might not have been, but everything else was small teams and they were run by leaders who might not have had the opportunity to do this in a more conventional organization. But what they did was they unleashed curiosity and they unleashed energy I've always been fascinated by more organizations don't do that. But. But they don't, right? Maybe this conversation will encourage people to lean into Let's hope. I want to go back, if you don't mind, quickly, the interview you had with Dot Linsley, because there were a couple of things that were said that I thought was interesting. Dot talked about, in so many organizations, we talk about middle managers as things, and we don't see them as whole people. And I think what HIRE is doing is giving individuals the opportunity to be whole people. I think that, and you said in response to that, you think that there's a crisis of middle management that you see in the organizations around us. I think I would argue HIRE is exempt from that crisis of middle management because it doesn't have middle managers in the classical sense of the term. When they went through this process of creating the micro enterprises, they said to the middle managers, you can stay on if you can find a job right in one of these newly forming. Or self forming autonomous work units, or you can leave. And quite a number of them left, but not all of them did. And I see some of the people who stayed on who are playing important roles in micro enterprises based on what they knew. They knew a lot of stuff. The tacit knowledge that they had from years of being middle managers is now serving the organization probably better than it ever has. And it's certainly serving them as well. As individuals. Because they're in a different type of, they have different responsibilities, right? Dart felt enormous responsibility for the individuals who worked for him for their lives and for their experiences. I thought about how would I say that in higher, and my sense is that you would change that to say, We had enormous opportunities. That's different than, so in the spirit of growth, right? We had enormous opportunities rather than enormous responsibilities. I think that, I think it's interesting how that works. And I think that it's just changing the perspective of the same people, putting them in different positions, treating them differently, rewarding them differently.
Thomas Bertels:
00:57:53
Yeah, although I think you could argue that the senior leadership mindset philosophy obviously makes a huge difference, I think one of the reasons why he felt that responsibility is because in these large organizations that people are always on the shopping block. And so I was curious about one thing you said that people can apply for leadership roles in a micro enterprise that currently somebody sits in. Now, on the outside, I would think this is like the worst like dog eat dog world. Scenario where you always got to be on the lookout for somebody gunning explicitly after your job actually being able to put in an application. And I'd be curious just like how you reconcile that.
Bill Fischer:
00:58:36
In the reincarnation of hire before the present one, where they were in these self forming autonomous work groups we called them ZZJYTs to abbreviate the Chinese term those organizations voted every quarter to see if they wanted to keep The leader. And they had a term that they referred to as catfish. And the they had a catfish in every unit. So the term comes from the Nordic seamen who would go out fishing for herring and they would apparently, I never knew this before, but they would put a catfish in every barrel because They wanted to keep the herring active. They didn't want the herring to die. There's no market value in dead herring. And so they would put this catfish in to keep the herring moving. And so they would Elect a catfish in these ZZJYTs so that the leader knew that if my team votes me out, we have a leader to to succeed me. My understanding is the managers of microenterprises today still operate at the pleasure of their team. So the team can. Vote them out. Okay, but I do not know if they still have catfish, but when I said, I don't think that would ever work in the West. so work at hire is not stressless. Okay. It's because the opportunities are high and the people that go to work for hire respond to those. stresses. People who love hierarchy and authority don't do well at hire and people who love to pursue their own way do well. And that's why hire after 40 years of doing this as an employer brand, nobody shows up at hire and is surprised by what's going on.
Thomas Bertels:
01:00:36
I think it's just a fundamentally different value proposition, Absolutely. Yep. right? Publicize product. High autonomy, high responsibility versus no autonomy, limited responsibility.
Bill Fischer:
01:00:49
Yeah. Yes. And I think that's an interesting way of going about staffing an organization.
Thomas Bertels:
01:00:56
I did an interview with Bill Passmore and and he said autonomy is the price we pay for a job in an organization, what we give up I thought it was a really interesting statement. This conversation brings it back full circle.
Bill Fischer:
01:01:12
Silence. Reaves has been doing out at the Henderson Institute, one of the things is that in the US, in Western Europe too, I'm sure mature Organizations lack vitality. Okay. And when you lack vitality, you lose the curiosity, you lose the novelty, pursuit of novelty, things of that nature. What you don't want to do is you don't want to do something that sparks curiosity in the pursuit of novelty and then fail to execute on that. You don't want to hire smart people and put them into a dumb organization because then you'll have angry smart people. Better to leave it as it is. so. I think what Haier has realized is that. Vitality, organizational vitality is important. the traditional organizational structures are complicit in reducing vitality. We think people will flourish with autonomy rather than not, right? And so the cost of losing autonomy is pretty high. Autonomy at Hire is dependent on the pursuit of great customer experience, Let's never forget that, right? Great customer experience is the goal. entrepreneurship is what we believe will get that. Autonomy is commensurate with entrepreneurship. these things fit together in a logical fashion. That's why I think you have to change all of them at the same time. I don't think we can create micro enterprises without giving them the autonomy to take advantage of being able to be close to the customer.
Thomas Bertels:
01:03:02
I think the other reason why I think it probably works for higher is that it's. Outside in because I've seen where we're trying to build an organization that's good for the people and it just never
Bill Fischer:
01:03:14
Yeah, we I was part just a couple months ago, I was part of a small panel at a conference, and I think we had 10, 10 or 15 people all together, and we did the same panel two days in a row with different participants, and the first day, we told the participants what they should know. It was a disaster. The second day we asked the participants what they were interested in and it changed everything. Just changing the way in which people in a room relate to one another. Either can create magic or not. And I think that's part of what they're trying to do at higher. The fact that they're doing it on such great scale is interesting. And I think that requires them to change everything at the same time so that some units are not in limbo as to what's going on.
Thomas Bertels:
01:04:04
I think it also creates a little bit codependency. We either all succeed or we all fail because everybody, is part of that process.
Bill Fischer:
01:04:15
though, that you and I are responsible for funding the capital risk involved with our new idea. So if I fail, you're not. Affected. Okay. Yeah, it de wristed for the enterprise, Yes. And I think these organizations have been around, the hierarchical organization, the pyramid organization has been around since Julius Caesar at least, and everything else in our lives have changed. Why are we not changing the way we organize to be better suited to the world around us, the technology available to us. And when I see big organizations take that pyramid and break them down into small pyramids, they missed an opportunity.
Thomas Bertels:
01:04:56
I know we could continue this conversation for another hour I really appreciate you. You're incredibly generous with your ideas and your experiences. So thank you so much for coming on the show.
Bill Fischer:
01:05:06
Thanks. It's been great. Thank you for me too.
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01:05:10
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