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The world is your R&D department

By Hu Yong & Hao Yazhou

Haier CEO Zhang Ruimin believes that innovation capacity is related to the degree to which resources can be integrated. ‘Wikinomics argues that the world is your R&D department.’

Thus, R&D should be an open platform. In the past, companies tended to treat research and development as a very confidential department, but if research and development is moved onto an open platform, there is an unexpected amplification of resources. P&G’s former Chief Operating Officer discussed this with Zhang Ruimin. Procter & Gamble’s product range is large, and consistent with the needs of users. A very important factor in enabling this was the development of an open platform. P&G has 9,000 internal R&D personnel, but this 9,000 become more than 1.8 million developers by means of open social platform integration.

The open platform not only brings together researchers, it can also bring users together. Haier Crystal Washing Machines are billed as the world’s quietest washing machines. Users determined its R&D direction. Research and development personnel can interact with 2 million users through the Internet, acquiring a large amount of data on user needs. Because they are autonomous and self-financing, R&D bodies first forecast the value of meeting the needs of the user, then world-class technology and equipment resources are integrated. This led to the creation of a very quiet washing machine with excellent washing results. After putting the product on the market, it rapidly drove Haier’s washing machine market share to the number one position, four times the average growth rate in the industry.

Zhang Ruimin says: ‘In the past, we spent lots of money digging for personnel, but now, as long as they agree with the Haier culture, the design team can be independent, and we establish contractual relationships with them. We do not develop products, instead we develop the market by capturing users. I just set what kind of user groups I want to capture, and what kind of reward we could achieve if we developed that market, then the actual design is a totally independent decision.’

Now, Haier owns five global R&D Centres (China, Asia, the Americas, Europe and Australia). These centres are platform-based R&D centres, forming the open system in which the world is Haier’s R&D department. Each Haier R&D centre can operate independently, but they can also coordinate when needed. According to local technical advantages, the R&D centres have different specialisms.

For example, North America’s scientific and technological innovation advantages are prominent, so Haier put its forward-looking R&D and creative platform in North America. Europe has obvious advantages in technology transfer, incubation of products and industrial design, so Haier puts its core technology research and technical feasibility analysis in Europe; the Japanese centre focuses on fine management and control advantages; and the office in China focuses on the industrialization of products.

These five independently operating R&D centres with their synergies comprise Haier’s open global R&D system, with an industry-leading speed of innovation. This is what creates global user resources. Haier’s innovative French and Italian refrigerators have not only won the acceptance of global users, but at the same time, they have become something that others in the industry are attempting to imitate.

This is an edited extract from Haier Purpose by Hu Yong and Hao Yazhou now available from Thinkers50 and Infinite ideas.

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