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Six Sigma Gives Way to Rendanheyi at GE Appliances

Post: Feb. 22, 2019

How China’s Appliance Giant Helped Wipe Out GE’s Middle Managers

From Bloomberg.com

Haier, the new owner, has its own plan to revive the struggling brand.

Weeks after sealing a $5.4 billion deal to buy General Electric Appliances (GEA) in 2016, Zhang Ruimin, chairman of China’s Haier Group, stood before 500 anxious GE white-collar workers who asked a barrage of questions about their futures. The irony wasn’t lost on Zhang, revered in China as a pioneering corporate titan but mostly anonymous to the outside world. When Zhang was struggling in the 1990s to transform Haier from a collective village enterprise into a world-class manufacturer, he idolized General Electric Co. because of its reputation for corporate excellence. “We went for courses at Crotonville, studying Six Sigma,” he says, referring to GE’s management training center in New York and the data-driven process-improvement strategy espoused by former Chief Executive Officer Jack Welch. “Now they were looking at me, asking: ‘What can you do for us?’ ”

As it turned out, quite a lot. Zhang may have cut his teeth on Six Sigma, but as Haier became the biggest appliance maker in the world, he thought it needed a different playbook to eliminate the sluggish bureaucracy that comes with size. So he created a management philosophy he calls rendanheyi, which translates loosely to “employees and customers become one.”

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