Haier - Insights, Learnings and Experiences (Post 5 - The Haier ZeroDX Awards Ecosystem Case Studies)
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits and collaboration with Haier, and why I believe the future of business lies in a NewEconomic Engine driven by AI and Business Ecosystems.
Post 4 - The Haier Zero DX Awards Ecosystem Case Studies
Mirko Kleiner - As a Thought Leader in Lean-Agile Procurement and a Registered Scrum@Scale Trainer, my personal mission is to unite various movements—Agile Leadership, Extreme Manufacturing, Scaling Agile, Lean-Agile Procurement, and more—to push the boundaries of Business Agility across organizations.
One company that stands out, and perhaps the only one of its kind globally, is Haier. With over 50 years of history as a white goods manufacturer, Haier has undergone its sixth major transformation, evolving into a network of over 4,700 Micro Enterprises (ME), all interconnected within Ecosystem Micro Communities (EMC).
Each ME operates with its own balance sheet, its own people, and collaborates closely with partners who share in the ECM’s success. This win-win philosophy, implemented on such a massive scale, is truly unprecedented and sets Haier apart as a pioneer in organizational and management innovation.
For over two years, the LAP Alliance has partnered with the Haier Model Institute (HMI), itself a Micro Enterprise within the Haier Group. Its mission is to spread the word about Haier’s New Economic Engine, or RenDanHeYi, which serves as the foundation of Haier's management model. For those unfamiliar with Haier, it is arguably the most disruptive and successful organization in the world, operating with virtually no bureaucracy and achieving an impressive annual growth rate of 20% over the last decade.
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits to Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
image source: HMI
Post 5 - The Haier ZeroDX Awards Ecosystem Case Studies
September 20th 2024 the Haier Zero Distance Excellence Awards 2024 have taken place in Qingdao, China. In this post, I’d like to give you more details about our four outstanding nominees, one of them has been awarded—each of whom has already implemented a New Economic Engine.
Stay tuned for an inside look at their remarkable journeys and how they are transforming their industries with innovative, user-centric ecosystems.
Ecosystem Case Studies
Find below a list of our nominees and further applicants from all around the world.
SINAA (Social Innovation Academy)
Uganda🇺🇬
Education / Not-for-profit
eRevo - Energy Revolution
Switzerland🇨🇭
hydrogen power storage technology
NET Engineering
Italy🇮🇹
Engineering in Construction Industry
Miles AS
Norway 🇳🇴
IT Services
Further participants & pioneers
Further Applications have been nominated by an international group of HMI Experts, such as Alidad Ebnoddin Hamidi, David Witney, Emanuele Quintarelli, Joost Minnaar, Ross MacIntyre, Saar Ben-Attar, William Malek.
Alongside with our nominees has Stuart and the Business Ecosystem Alliance, the IMD and Gary Hamel supported the Awards.
Find the full list of winners here.
We might extend the list of detailed Ecosystem Case Studies to a later stage.
Conclusions
The New Economic Engine and this list of Ecosystem Case Studies, that already have applied it, will serve as a huge inspiration for organizations worldwide. All the participants and winners have proven that these principles are universally applicable, regardless of the size, industry, or culture of the organization. It has also reinforced that we’re on the right path with our movement, the LAP Alliance, but at the same time, there is still so much more to do and learn.
Next Post - How to setup your own Economic Engine with the Lean Ecosystem Canvas
Stay tuned for the upcoming posts in this series!
All Posts of this Series
Post 1 - Visiting Haier in Qingdao China
Post 2 - The New Economic Engine
Post 3 - Preview of the Haier ZeroDX Awards
Post 4 - The Haier ZeroDX Awards 2024
Post 5 - The Haier ZeroDX Awards Ecosystem Case Studies
eRevo - Energy Revolution via a Partner Ecosystem, Setup in 1 DAY (Ecosystem Case Study)
Congratulations to eRevo from Switzerland for their nomination at the 2024 Haier ZeroDX Awards! eRevo was recognized for their groundbreaking Energy Revolution through a Partner Ecosystem—a remarkable achievement made possible in just one day thanks to LAP and the Lean Ecosystem Canvas!
eRevo, Switzerland, https://www.eRevo.ch
Congratulations to eRevo from Switzerland for their nomination at the 2024 Haier ZeroDX Awards! eRevo was recognized for their groundbreaking Energy Revolution through a Partner Ecosystem—a remarkable achievement made possible in just one day thanks to LAP and the Lean Ecosystem Canvas!
As part of our collaboration with the Haier Model Institute (HMI), we proudly supported the 2024 Haier ZeroDistance Excellence Awards by nominating outstanding organizations, individuals, and case studies from around the world. We want to extend our deepest recognition to all participants, who are true pioneers in embracing new management models and fostering ZeroDistance with their customers, suppliers, and communities. Your innovative spirit is shaping the future of business!
I’m incredibly proud of eRevo, one of our clients and nominees by the LAP Alliance, has truly earned this recognition through their progressive work!
Discover more about eRevo and their Ecosystem Success Story through an insightful interview with their CEO Gregor Zust.
If you’re new to Ecosystems and the New Economical Engine read the linked blog post first.
Image Source: Linkedin
Interview with CEO Gregor Zust
This interview was conducted as part of the Haier ZeroDX Awards assessment, with CEO Gregor Zust, interviewed by Mirko Kleiner.
What was the problem? How was it identified?
eRevo is a dynamic startup pioneering advancements in hydrogen technology, aimed at developing safer, more efficient, and cost-effective solutions for storing sustainable energy generated from sources like wind and solar. From the outset, eRevo has engaged directly with both prospective and existing customers, as well as potential partners.
Early on, our flagship product line, Triewald, garnered significant interest and support, including from industry leader GKN Hydrogen. Their endorsement underscored our vision and commitment to transforming energy storage solutions.
Image Source: eRevo
As we progressed, initial prototypes in home power storage revealed a clear market demand and substantial business potential in industrial and grid-scale power storage solutions. Recognizing the immense investment required for production, sales, and delivery capabilities, the founders were determined to explore avenues that would minimize equity dilution and would increase risk massively.
This led to the concept of scaling the business case via a partner ecosystem, a strategy built on trust-based collaborations and a win-win mindset with our current and future partners. This approach ensures that eRevo can scale operations and product development effectively while maintaining strategic leadership as the orchestrator of the partner ecosystem and it’s strategic partners (participants).
Who led the change?
The collaboration between eRevo and GKN Hydrogen was spearheaded by Gregor Zust, CEO of eRevo, and Guido Degen, CEO of GKN Hydrogen, both of whom shared a strong commitment to revolutionizing power storage solutions for sustainable energy. Their leadership was pivotal from the outset, actively guiding and supporting the development of the initial joint prototype for home power applications. This early phase saw both leaders personally investing time, resources, and capital under a basic formal agreement.
As positive market feedback underscored the potential, it became evident that scaling the partnership required a more agile approach than traditional contracts could offer. Drawing on their current experience, Gregor and Guido championed a partner ecosystem model grounded in trust, a collaborative culture, and adaptive agreements. Key considerations such as joint strategy, cost and wealth sharing, intellectual property rights, and minimal governance were meticulously addressed to ensure mutual benefit and scalability.
To formalize this innovative approach, both CEOs convened for a focused one-day workshop facilitated by Mirko Kleiner, a distinguished Agile Ecosystem Coach. This workshop was instrumental in defining and establishing the joint partner ecosystem and solidifying their commitment through a tailored agreement.
Gregor Zust and Guido Degen's leadership, expertise, and collaborative spirit were instrumental in navigating complexities and fostering a resilient partnership that continues to drive innovation in hydrogen energy storage.
Image Source: Mirko Kleiner, Contents eRevo
How many teams/individuals were involved?
The collaborative effort between eRevo and GKN Hydrogen was orchestrated through a phased approach, with eRevo acting as the orchestrator and GKN Hydrogen as a key participant of the new partner ecosystem. The initial phase involved both parties defining the partner ecosystem together (phase 1), followed by the inclusion of additional partners for sales distribution and delivery across various verticals (phase 2).
A pivotal moment in this process was a one-day workshop held in Zurich, Switzerland, after four weeks of thorough preparation. This session brought together essential stakeholders from both organizations, including:
Gregor Zust (CEO, eRevo) and Guido Degen (CEO, GKN Hydrogen), who provided strategic leadership and alignment.
Partner representatives from eRevo, contributing domain expertise and insights.
Legal counsel, ensuring the formalization and legality of partnership agreements.
Sales and product development representatives, pivotal for market strategy and product evolution.
Production representatives, crucial for ensuring scalability and operational feasibility.
During the workshop, facilitated by Mirko Kleiner and visual tools such as the Lean Ecosystem Canvas™ and Lean Procurement Canvas™, the participants successfully finalized a partnership agreement and established a sales distribution framework. Additionally, they defined a Minimum Viable Governance (MvG) framework across three key levels:
Strategic Level: Responsible for defining the ecosystem strategy, making strategic decisions, and resolving impediments.
Product Level: Tasked with joint product development aligned with ecosystem strategy and market feedback.
Sales and Delivery Level: Responsible for selling and delivering joint products and services to customers.
At each governance level, key individuals were identified, selected, and aligned on collaborative principles and operational practices, ensuring effective coordination and synergy across the partnership.
Image Source: eRevo
What systems and tools were employed?
As of its establishment in late July 2024, the partner ecosystem leverages essential systems and tools to facilitate seamless collaboration and operational efficiency:
Lead, Prospect, and Client Management: Centralized tools are deployed to manage leads, prospects, and client relationships effectively. These tools enable comprehensive tracking and communication across the ecosystem.
Cost Breakdown and Value Stream Management: Robust software solutions are employed to meticulously breakdown costs along the value stream for each product line. Access to mutual calculation tools ensures transparency and alignment in financial assessments.
Collaboration Tools for Ecosystem Information: Dedicated collaboration platforms are utilized to share critical ecosystem information among partners. This includes strategic insights, operational updates, and resource allocations.
Customer Feedback and Joint Product Development: Specialized tools facilitate the sharing of customer feedback and enable collaborative efforts in joint product development. This ensures rapid iteration based on market insights and enhances product alignment with customer needs.
Beside the direct interaction between all participants form these systems and tools the backbone of the partner ecosystem, fostering a cohesive environment where information flows seamlessly and collective efforts are streamlined towards shared objectives.
What decisions did the team need to make?
Before convening for the pivotal one-day workshop, eRevo faced significant uncertainties regarding scalability and financial resources. Traditionally, a capitalization round would have been pursued to secure necessary funds for procurement from GKN Hydrogen. However, with this option not their preference, the decision was made to develop a partner ecosystem rooted in a mutually beneficial culture of collaboration.
Key to this decision was the initial reaction of partners, particularly GKN Hydrogen, to this new approach. Fortunately, due to a strong rapport and shared values between Gregor Zust and Guido Degen, CEOs of eRevo and GKN Hydrogen respectively, these concerns were swiftly addressed in a preliminary call ahead of the workshop.
Another critical decision centered around legal frameworks and managing uncertainties inherent in such agile collaborations. Mirko Kleiner's expertise proved instrumental in devising a flexible contractual framework that supported agility. Both parties agreed that the appendices of the Master Service Agreement (MSA) would evolve over time, treating it as "living documents" to accommodate future amendments and innovations.
During the intensive workshop, essential decisions were made on-the-spot regarding critical aspects such as intellectual property rights, warranties within the partner ecosystem, and other logistical challenges. The structured workshop format and decisive leadership ensured that these complex issues were resolved promptly and in good faith.
Looking ahead, the Minimum Viable Governance (MvG) framework was established to define general responsibilities and establish both clear communication and escalation pathways for strategic discussions or impediments. This framework laid the foundation for effective collaboration and alignment even with further ecosystem participants moving forward.
Image Source: eRevo - Realtime translation into the MSA
What resources were they given?
eRevo and GKN hydrogen had all resources needed to make the change possible, in this case to set up the partner ecosystem. Up till now every party covered their own time and costs. The agreed commercial model does foresee joint funds to invest e.g. cover joint risks or do joint investments.
Not yet defined is how GKN will address the further change needed to implement the agreed MvG. We’re positive that this will be done in a similar smooth way as it has the full leadership support.
Did they collaborate with external parties?
The establishment of the partner ecosystem involved key stakeholders from eRevo and GKN Hydrogen, with additional contributions anticipated from specialized teams in sales and delivery, pending finalization of the legal agreement.
Central to the success of this initiative was the trust and leadership demonstrated by Gregor Zust (CEO, eRevo) and Guido Degen (CEO, GKN Hydrogen). Their unwavering support facilitated swift decision-making and enabled the efficient setup of the partner ecosystem within a single day.
Mirko Kleiner played a crucial role as the lead facilitator, bringing in essential tools and best practices to streamline processes and framework development. While influential in guiding discussions, it's important to note that decisions were ultimately made by the involved parties themselves.
In terms of specific resources:
Budget: Allocation specifics were tailored to operational needs and scaling requirements, ensuring financial prudence while maximizing impact.
Time: A focused four-week preparation period preceded the intensive one-day workshop, optimizing time for strategic alignment and agreement formulation.
Training and Support: Ongoing support from legal advisors and consultants like Mirko Kleiner bolstered the process, enhancing expertise and ensuring compliance with evolving regulatory frameworks.
These resources collectively supported the rapid and effective establishment of the partner ecosystem, setting a solid foundation for collaborative growth and innovation in hydrogen energy solutions.
What were the impacts?
Impact on User Experience
Prior to the one-day workshop the introduction of joint prototype projects marked a transformative shift in user experience within the energy storage sector and tested the partnership at the same time. These projects not only showcased the comprehensive capabilities of the product but also demonstrated the synergistic strengths of the partner ecosystem.
End users benefited from a seamless journey, starting from their initial interaction with the product to its delivery and installation. This integrated approach ensured a smooth and efficient experience throughout, enhancing usability and overall satisfaction.
Specific improvements included:
Seamless Integration: Users experienced a cohesive process from start to finish, thanks to streamlined collaboration between eRevo and GKN Hydrogen within the partner ecosystem. This integration eliminated traditional silos, enhancing overall efficiency.
Trust and Reliability: The involvement of reputable brands in production and delivery instilled confidence among users. This trust was bolstered by consistent delivery of high-quality service and products, meeting or exceeding expectations.
Enhanced Service Quality: The partner ecosystem fostered a culture of excellence, prioritizing user needs and feedback. This proactive approach led to continuous improvements in service quality and customer support.
By focusing on collaboration and leveraging collective expertise, the partner ecosystem not only met but exceeded user expectations, setting a new standard for reliability and customer satisfaction in sustainable energy solutions.
Impact on Ecosystem Parties
The 1-day workshop played a pivotal role in reinforcing a shared purpose and alignment among ecosystem partners. It fostered open and transparent discussions on critical aspects such as cost- and wealth-sharing, defining joint ambitions, and clarifying business objectives. These discussions strengthened bonds and deepened mutual understanding across the ecosystem.
Key positive outcomes include:
Enhanced Collaboration and Alignment: The workshop facilitated cohesive decision-making and alignment of strategies among partners. Clear agreements on roles, contributions, and shared goals set a strong foundation for collaborative efforts.
Improved Product and Service Offerings: Transparent sharing of market feedback and knowledge enhanced the quality and relevance of both joint and individual products and services. This iterative process ensures continuous improvement and responsiveness to customer needs.
Expanded Reach and Market Access: The planned inclusion of additional partners specialized in sales and delivery in the next phase will broaden market reach and streamline market access. This expansion is expected to strengthen market presence and competitiveness along the entire value chain.
Long-term Business Development: Agreed-upon ambitious objectives for the mid to long term, such as significantly enhancing cost efficiency in storing power per kWh, underscore the ecosystem's commitment to continuous innovation and market leadership. These objectives will drive sustained growth and optimize competitiveness over time.
In summary, the collaborative efforts and strategic agreements forged during the workshop have positioned the ecosystem partners for mutual success, fostering innovation, growth, and enhanced market impact in the evolving landscape of sustainable energy solutions.
Impact on Employees
While it is early to quantify individual impacts, the initiative is expected to bring several positive changes for employees:
Empowerment and Purpose: The joint vision and collaborative efforts empower employees by aligning them with a meaningful purpose. This shared vision fosters a sense of ownership and commitment to achieving collective goals, boosting morale and engagement.
Satisfaction and Collaboration: Improved cross-company collaboration breaks down internal and external silos, promoting a culture of openness and shared learning. This collaborative environment enhances job satisfaction and creates opportunities for personal and professional growth.
Increased Motivation & Adaptability: The introduction of agile methodologies across both organizations fosters dynamic and responsive ways of working. This shift promotes flexibility, innovation, and cross-functional collaboration, enhancing overall productivity.
Enhanced Impact through User Feedback: Employees now have direct access to market insights and customer feedback through collaborative channels. This direct engagement enables them to adapt swiftly to market demands and improve product offerings effectively.
Skill Development: Employees gain new skills and knowledge through exposure to diverse perspectives and specialized expertise within the partner ecosystem. This continuous learning enriches their professional capabilities and prepares them for future challenges.
Overall, the initiative is anticipated to create a supportive and stimulating work environment where employees thrive on innovation, collaboration, and shared success in driving forward sustainable energy solutions.
Impact on the Overall Organization
The collaboration has had profound effects on both eRevo and GKN Hydrogen, influencing their market position, operational efficiency, and strategic alignment:
For GKN Hydrogen:
Enhanced Market Access: GKN Hydrogen now enjoys expedited market entry without the need to develop an independent sales and delivery infrastructure. This strategic advantage accelerates their global market reach.
Agile Transformation: Adopting agile methodologies through this partnership extends beyond the current product line, potentially transforming GKN Hydrogen's broader business operations. This shift enhances their adaptive capabilities and resilience.
Improved Product Development: Direct market feedback obtained through the ecosystem enhances the refinement of current products and informs future innovations. This iterative process boosts product quality and optimizes production efficiency, thereby bolstering financial performance.
For eRevo:
Accelerated Scaling: Collaborating within the ecosystem enables eRevo to scale its business model rapidly. The shared investment of time and resources minimizes risks for all participants.
Orchestrator Role: As the orchestrator, eRevo leverages its expertise to support ecosystem participants in areas such as product knowledge, delivery logistics, and regulatory compliance. This support facilitates seamless integration for new partners, ensuring a streamlined entry into new markets or verticals.
For Phase 2 Partners (Sales and Delivery):
Competitive Advantage: Partners involved in sales and delivery benefit from access to a comprehensive product line under a recognized global brand. This positions them more competitively in the market.
Business Development: They play a crucial role in shaping product development and ecosystem collaboration, influencing upstream processes and enhancing strategic partnerships.
Overall, the partnership enhances operational efficiency, strengthens market positioning, and fosters strategic alignment across all parties involved. It exemplifies a collaborative approach that not only drives immediate business outcomes but also cultivates long-term growth and resilience in the competitive landscape of sustainable energy solutions.
Impact on Corporate Culture
While it is early to fully assess the impact on corporate culture across the partner ecosystem, initial observations indicate significant alignment in values and culture from the outset, which laid the foundation for this innovative approach. The initiative is anticipated to foster several positive changes in corporate culture for all participants:
Inclusion and Collaboration: The collaborative nature of the partnership promotes inclusivity, encouraging diverse perspectives and contributions. This inclusive environment cultivates a sense of belonging and unity among team members.
Agility and Decision-Making: The adoption of agile practices accelerates decision-making processes, enabling quicker responses to market changes and opportunities. This agility enhances organizational responsiveness and adaptability.
Innovation and Risk-Taking: A culture that embraces innovation is nurtured through shared goals and continuous improvement. The partnership encourages experimentation and risk-taking, fostering a mindset where creative solutions are welcomed and supported.
Resilience and Learning from Failure: Building a 'failure culture' where failures are viewed as learning opportunities promotes resilience and growth. Psychological safety is enhanced, empowering employees to take calculated risks and innovate without fear of repercussions.
Trust and Psychological Safety: Open communication and mutual trust are fundamental to the partnership, creating a psychologically safe environment where individuals feel comfortable expressing ideas and concerns. This trust enhances collaboration and problem-solving capabilities.
Overall, the initiative is poised to instill a corporate culture characterized by inclusivity, agility, innovation, resilience, and psychological safety. These shifts in values, behaviors, and attitudes will contribute to a more adaptive and supportive organizational environment conducive to sustained growth and success.
Image Source: eRevo
Get in touch & learn more
To get in touch or to learn more or reach out to us to get a direct contact with Gregor.
eRevo website: https://erevo.ch
GKN Hydrogen website: https://www.gknhydrogen.com/
Recommended Read
We do recommend to check out the Lean Ecosystem Canvas that has enabled this collaborative setup of the Adaptive Partner Ecosystem.
Author
Miles - The value-based IT Company (Ecosystem Case Study)
Congratulations to Miles - The value-based IT Company from Norway for being nominated at the 2024 Haier ZeroDX Awards! Miles was recognized for reinventing collaboration in the IT industry.
Miles, Norway, https://www.Miles.no
Congratulations to Miles - The value-based IT Company from Norway for being nominated at the 2024 Haier ZeroDX Awards! Miles was recognized for reinventing collaboration in the IT industry.
As part of our collaboration with the Haier Model Institute (HMI), we proudly supported the 2024 Haier ZeroDistance Excellence Awards by nominating outstanding organizations, individuals, and case studies from around the world. We want to extend our deepest recognition to all participants, who are true pioneers in embracing new management models and fostering ZeroDistance with their customers, suppliers, and communities. Your innovative spirit is shaping the future of business!
I’m incredibly proud of Miles, one of our nominees by the LAP Alliance, has truly earned this recognition through their progressive work!
Discover more about Miles and their Ecosystem Success Story through an insightful interview with their CEO Camilla Amundsen and founder Tom Georg Olsen.
If you’re new to Ecosystems and the New Economical Engine read the linked blog post first.
Image Source: Linkedin
Interview with CEO Camilla Amundsen and founder Tom Georg Olsen
This interview was conducted as part of the Haier ZeroDX Awards assessment, with CEO Camilla Amundsen and founder Tom Georg Olsen, interviewed by Mirko Kleiner and Bjarte Bogsnes.
Image Source: Linkedin
What was the problem? How was it identified?
The founders of Miles identified a problem with traditional management practices that led to mediocrity, lack of passion, and a focus on processes over people based on previous work experience in traditionally managed companies.
Furthermore was and still is the IT Consultancy market very competitive and it’s very difficult to get great employees.
As the company was founded on the values of professional authority and warmth and has been operating accordingly and continuously evolving ever since.
By today Miles is a leading example of a software and IT company in Norway and Litauen with 7 locations that are operating as a business ecosystem, where each cell is highly independent and self-organized.
Who led the change?
Tom Georg Olsen spearheaded the change initiative at Miles. Olsen, with a background in IT and telecom, emphasized values-based servant leadership and warmth over traditional management practices. In May 2023 Camilla Amundsen took over his servant leadership role.
Generally speaking, at Miles everybody is encouraged to lead the change.
Image Source: Miles
How many teams/individuals were involved?
Initially during the foundation of Miles it was the founders who had the biggest influence. They started with the vision to create an outstanding workplace. They’re strong believers that if the employees are passionate that their customers would be impacted positively by that too. One change that Miles has implemented was a rigid recruiting process, where they focused not just on competence, but also at character. It became a quality label to work for Miles and the employees are still proud of this.
Today is the entire company involved in the change process, particularly focusing on recruitment, cultural activities (like "Smiles"), and enhancing transparency. Speaking to Camilla it becomes obvious how serious they take it with principles such as people do come first. The people are proud to work at Miles and the company has one of the highest employee satisfaction rates in the industry.
What systems and tools were employed?
Miles employed a culture of trust, transparency in cost management (e.g., open posting of PC and training costs), and social bonding activities like "Smiles" gatherings. These gatherings also extend their business ecosystem to their families.
They utilized a servant leadership model where decisions were decentralized, and employees were trusted to make responsible choices.
Tom mentioned that they tried to prepare everybody for crisis so that they could decentralized take decisions in case a new challenge would rise. In other words Miles has by today 250 CFO’s you even take financial decisions in the interest of Miles no matter of their role.
To empower a decentralized decision taking transparency became a huge driver. So had every purchase taken be published in the intranet. Of course had this a control function, but this was not the purpose of it. Moreover the purpose was to encourage everybody to take decisions and learn from others what they do, e.g. if they spend the money to join a conference or if they bought a new laptop.
On the other hand they are also looking for a shared purpose, common goals that are co-created and jointly adapted as needed.
What decisions did the team need to make?
The key decision was made as the company was founded, wanting to run the company in a radically different way than traditional companies. This included for instance recruitment being based on values and cultural fit rather than solely on technical skills, and fostering a culture of openness and trust in financial matters. The company operates without traditional budgets and targets, just a very lean forecasting process.
Self-critical Camilla said that it’s a constant challenge to keep the lean structure while growing. However, the people and the culture are their safety-net and won't allow any fall-back into traditional management.
What resources were they given?
There was no dedicated change team, as the management team themselves led the change from the start of the company. Miles operates without traditional budgets and targets. Employees can attend whatever training they want, wherever in the world. No training or travel budgets.
Did they collaborate with external parties?
Miles collaborated with NHH, the largest Norwegian business school, to better understand what kind of management model they were practicing. The conclusion was “Servant Leadership”.
Miles relied on employee referrals for recruitment but did not heavily engage with external parties like vendors or consultants for their core operational changes.
On the IT side of the business Miles partners with big IT Providers such as Microsoft and tries to establish their partnerships on the same set of values.
What were the most significant challenges and how did the team overcome them?
Challenges included ensuring cultural fit in recruitment and maintaining a high level of trust and transparency. Strategies included rigorous employee referrals, thorough reference checks, and maintaining openness in financial matters.
Image Source: Miles
What were the impacts?
Impact on User Experience
Improved employee satisfaction and retention, indirectly benefiting customer relationships.
Impact on Ecosystem Parties
Strengthened relationships with customers due to low employee turnover and high employee satisfaction.
Impact on Employees
Enhanced morale, productivity, and engagement through a culture of trust and transparency.
Impact on the Overall Organization
Achieved both strong growth and great financial performance and recognition as a top workplace in Europe.
Impact on Corporate Culture
Fostered a culture of values-based servant leadership and warmth, integral to Miles' identity.
Get in touch
To get in touch with Miles visit their website for more informations or reach out to us to get a direct contact with Camilla and Tom Georg.
Recommended Read
We do recommend Bjartes newest book about Beyond Budgeting, which is a must read for every leader and was the foundation of Miles transformation. Learn more about it here https://bbrt.org
Author
Engineering Agility: How Net Engineering Reinvented Its Processes and Culture Empowering Teams (Ecosystem Case Study)
Congratulations to the NET Engineering for being nominated at the 2024 Haier ZeroDX Awards! Net Engineering was recognized for reinventing Its Processes and Culture in the construction industry.
NET Engineering, Italy, https://www.net-e.it/en
Congratulations to the NET Engineering for being nominated at the 2024 Haier ZeroDX Awards! Net Engineering was recognized for reinventing Its Processes and Culture in the construction industry.
As part of our collaboration with the Haier Model Institute (HMI), we proudly supported the 2024 Haier ZeroDistance Excellence Awards by nominating outstanding organizations, individuals, and case studies from around the world. We want to extend our deepest recognition to all participants, who are true pioneers in embracing new management models and fostering ZeroDistance with their customers, suppliers, and communities. Your innovative spirit is shaping the future of business!
I’m incredibly proud of Net Engineering, one of our nominees by the LAP Alliance, has truly earned this recognition through their progressive work!
Discover more about Net Engineering and their Ecosystem Success Story through an insightful interview with their CEO Silvia Furlan.
If you’re new to Ecosystems and the New Economical Engine read the linked blog post first.
Image source: Net Engineering
This case study details Net Engineering's extensive journey through an agile transformation initiated in early 2021. The company, driven by a need to address critical organizational challenges such as unclear roles, leadership gaps, and improved project management, embraced SCRUM and Scrum@Scale methodologies. Under the leadership of CEO Silvia Furlan and with the expert guidance of Paolo Sammicheli, a Registered Scrum Trainer and Business Coach, Net Engineering embarked on a comprehensive overhaul of its processes and corporate culture.
The transformation involved the entire organization, including approximately 100 employees across 9 teams, later expanded to 11. Analog tools and digital platforms like Trello, Miro, and Microsoft Teams empowered teams to manage projects more effectively. Implementing modern engineering tools such as BIM was seamlessly integrated with the agile framework, further enhancing project outcomes.
A critical component of the transformation was the focus on continuous learning and development. Extensive training was provided not only to Product Owners and Scrum Masters but also to all developers through customized materials tailored to the company’s needs. Management received specialized coaching, and the organization adopted facilitation techniques like Delegation Poker to improve decision-making and delegation.
The impact of this transformation was far-reaching, leading to quicker resolution of impediments, enhanced team collaboration, and a more robust feedback culture. Additionally, a collaboratively written company manifesto helped to solidify a shared sense of purpose and identity among employees. The agile practices also positively influenced relationships with external vendors, some of whom have become trusted partners due to the direct and transparent interactions fostered by the new approach.
Overall, this case study illustrates how Net Engineering successfully leveraged agile methodologies to overcome its initial challenges and create a more dynamic, responsive, and strategically aligned organization.
Image Source: Linkedin
Interview with Silvia Furlan, CEO Net Engineering
This interview was conducted as part of the Haier ZeroDX Awards assessment, with Silvia Furlan CEO, interviewed by Mirko Kleiner and Paolo Sammicheli.
What was the problem? How was it identified?
In 2020, Net Engineering recognized the need to improve its organizational structure and project management processes. The initial signs of the problem were identified through a company-wide inquiry, during which we asked critical questions such as "What and how can we do better?" and "What are the most critical issues in our organization?"
The feedback revealed significant challenges: unclear roles, organizational redundancies, a lack of kick-off meetings for new projects, and frequent personnel shifting between projects. Additionally, there were concerns about leadership, particularly regarding the experience of Project Team Leaders (PTLs) and Project Managers (PMs) and the lack of strong, charismatic leaders who could foster team spirit and innovation.
These insights highlighted the need for a structured, agile approach to address these issues, leading us to adopt SCRUM as the framework for our agile transformation.
Who led the change?
The management team spearheaded the change initiative at Net Engineering under the leadership of Silvia Furlan, our CEO. With her strategic vision and commitment to organizational improvement, Silvia was pivotal in driving the transformation. To ensure the success of this initiative, we brought in external expertise by hiring Paolo Sammicheli, a Registered Scrum Trainer and Business Coach. Paolo's extensive experience in agile methodologies and his deep understanding of SCRUM were invaluable in guiding our teams through the agile transformation process.
Image Source: NET Engineering
How many teams/individuals were involved?
The agile transformation at Net Engineering involved the entire organization, encompassing approximately 100 individuals. These individuals were organized into nine cross-functional teams. Each team comprised members from various departments, ensuring diverse skills and perspectives were brought into the process. The collaboration between teams was carefully coordinated, with each team focusing on specific projects while aligning with the broader organizational goals. This structure facilitated effective communication and knowledge sharing and ensured that the transformation was comprehensive and inclusive of all key functions within the company.
What systems and tools were employed?
To successfully implement our agile transformation, we utilized a combination of methodologies, systems, and tools that supported collaborative work and the specific needs of our engineering processes. Central to our approach was the adoption of SCRUM and Scrum@Scale methodologies, which provided a structured yet flexible framework for managing projects and scaling agile practices across the organization.
For collaborative planning and brainstorming, we used analog tools like Post-its and markers, which were particularly effective during in-person sessions. On the digital front, we employed Trello for task management, Miro for virtual whiteboarding, and Microsoft Teams for communication and collaboration across the organization, ensuring that all teams were aligned and informed in real time.
In parallel, we leveraged modern engineering tools like Building Information Modeling (BIM) to maintain precision and efficiency in our engineering processes, seamlessly integrating them with agile practices. The combination of SCRUM, Scrum@Scale, and these tools allowed us to foster continuous improvement, transparency, and effective coordination throughout the entire transformation process.
What decisions did the team need to make?
Several critical decisions were made to ensure the initiative’s effectiveness and success throughout the agile transformation process. We began in January 2021 with nine teams, each focusing on different aspects of our projects. As the transformation progressed, it became evident that adjustments were necessary to optimize team performance and overall efficiency.
In October 2022, we strategically decided to balance skills across the teams to improve their composition, ensuring that each team had the necessary expertise to meet their objectives. Additionally, recognizing the need to scale our efforts further, we launched two additional teams, expanding our total to 11.
To manage this increased scope and maintain coherence across the teams, we introduced two Team of Teams structures, each led by a Chief Product Owner. This decision was pivotal in coordinating efforts across multiple teams and ensuring alignment with our organizational goals.
Furthermore, we restructured the roles of our Technical Director and BIM Manager, moving them externally to serve as resources for all teams. This shift allowed us to leverage their specialized knowledge more effectively across the organization, providing consistent technical support and guidance.
These decisions were driven by our commitment to continuous improvement and the need to adapt our structure to meet evolving challenges and opportunities within our agile framework.
What resources were they given?
To ensure the successful agile transformation at Net Engineering, we allocated a comprehensive set of resources to equip every level of the organization with the necessary tools and knowledge.
All Product Owners and Scrum Masters were given specialized training by Paolo Sammicheli, a Registered Scrum Trainer, to ensure they deeply understood the SCRUM framework and could effectively lead their teams. Additionally, every developer received training through customized materials specifically created for our context, titled "Scrum in Net," which helped align all team members with SCRUM principles tailored to our operational needs.
The management team also received targeted coaching from Paolo Sammicheli to further support the transformation. This coaching was crucial in aligning leadership with agile methodologies and ensuring management could effectively guide and support the teams through the transformation. This included training in Scrum@Scale, which is essential for scaling agile practices across the entire organization.
Furthermore, Paolo conducted extensive team coaching sessions and personalized one-on-one meetings during the transformation process. These sessions provided ongoing support and addressed specific challenges as they arose, ensuring that everyone, from team members to senior management, was fully equipped to embrace and implement the agile methodologies.
These extensive training and coaching resources were vital in empowering our teams and leadership to drive the agile transformation successfully.
Did they collaborate with external parties?
Collaboration with an external expert, Paolo Sammicheli, significantly supported our agile transformation at Net Engineering. Paolo is a Scrum Trainer for Agile Education by Scrum Inc. and the author of Scrum for Hardware. His expertise was instrumental in guiding our teams through the agile transformation.
Paolo's contributions were multifaceted: he provided comprehensive training for our Product Owners, Scrum Masters, and developers, tailored specifically to our organization's needs. He also delivered coaching sessions for our management team, ensuring that leadership was aligned with agile principles and equipped to scale these practices across the organization.
Paolo's deep knowledge of SCRUM and his specific focus on hardware environments were particularly valuable in helping us adapt agile methodologies to our engineering processes. His involvement ensured that our transformation was not just a theoretical shift but a practical, hands-on implementation of SCRUM that addressed the unique challenges of our industry.
What were the most significant challenges and how did the team overcome them?
One of the most significant challenges we encountered during the agile transformation was the external environment's reliance on a traditional waterfall process. As we implemented an internal agile process, we faced criticism and objections from stakeholders accustomed to the waterfall approach’s more linear and predictable nature.
To overcome this challenge, our strategy was to adopt a pragmatic and results-oriented approach. Instead of enforcing the agile methodology outright, we began by experimenting with the method on a smaller scale within the organization. By focusing on specific projects, we were able to demonstrate the tangible benefits of agile practices, such as increased flexibility, faster feedback loops, and improved team productivity.
As these initial experiments yielded positive results, we used them as evidence to address the criticisms and objections. By showcasing real-world examples of how agile processes could enhance our project outcomes, we gradually built support for the broader adoption of agile methodologies within the organization. This approach not only mitigated resistance but also fostered a culture of continuous improvement and openness to new ways of working.
One of the most significant challenges we encountered during the agile transformation was the external environment's reliance on a traditional waterfall process. As we implemented an internal agile process, we faced criticism and objections from stakeholders who were accustomed to the more linear and predictable nature of the waterfall approach.
To overcome this challenge, our strategy was to adopt a pragmatic and results-oriented approach. Instead of enforcing the agile methodology outright, we began by experimenting with the method on a smaller scale within the organization. By focusing on specific projects, we were able to demonstrate the tangible benefits of agile practices, such as increased flexibility, faster feedback loops, and improved team productivity.
As these initial experiments yielded positive results, we used them as evidence to address the criticisms and objections. By showcasing real-world examples of how agile processes could enhance our project outcomes, we gradually built support for the broader adoption of agile methodologies within the organization. This approach not only mitigated resistance but also fostered a culture of continuous improvement and openness to new ways of working.
Image Source: NET Engineering
What were the impacts?
Impact on User Experience
The agile transformation at Net Engineering had a positive impact on the end-user experience. By adopting agile methodologies, we increased our responsiveness to unexpected requests and unplanned changes, which significantly improved our ability to meet user needs more effectively and efficiently.
The shift to agile allowed us to take on greater responsibility for the projects, leading to more proactive management and quicker adaptations to user feedback. As a result, our users experienced improved usability and greater satisfaction, as their requirements were addressed more promptly and accurately. The overall user experience has benefitted from the enhanced flexibility and responsiveness that agile practices have brought to our workflows.
Impact on Ecosystem Parties
The agile transformation at Net Engineering positively influenced various parties within our ecosystem, including suppliers, partners, and customers. By empowering each Scrum Team to manage its own vendors independently, we streamlined vendor relations and enhanced responsiveness. Teams received support from the central function to onboard new vendors and resolve issues, ensuring smooth operations across all projects.
One significant outcome was the introduction of an enterprise backlog, which provided greater clarity on future needs. This not only helped in better planning and resource allocation but also strengthened our relationships with suppliers and partners by giving them a clearer understanding of our long-term requirements.
Additionally, proactive partner onboarding reduced the need for Scrum Teams to rely on work packages from other teams, minimizing dependencies and simplifying the overall process. This autonomy allowed for more direct and effective communication between teams and external vendors, which, in turn, fostered stronger, more loyal partnerships. Some vendors have evolved into trusted partners thanks to the close collaboration and mutual trust built through these direct interactions.
Impact on Employees
The agile transformation at Net Engineering had a significant positive impact on our employees, influencing morale, productivity, and engagement. One of the most notable changes was the ease of onboarding new employees. The structure and clarity provided by Scrum Teams made it simpler and faster to integrate new hires into the organization, allowing them to become productive members of their teams quickly.
With an increasing number of remote employees, teamwork became even more crucial. The agile framework emphasized collaboration and communication, which not only helped remote employees stay connected and engaged but also enhanced overall productivity. By working closely within their teams, employees developed a stronger sense of belonging and camaraderie, which has been instrumental in improving talent retention.
Moreover, the transformation process fostered continuous improvement in skills across the organization. For instance, we recently conducted training sessions focused on holding effective meetings. This enhanced our meeting efficiency and reinforced our commitment to ongoing professional development. By equipping employees with these new skills, we have created a more dynamic and innovative work environment where continuous learning is valued and encouraged. The Agile approach, fostering greater engagement from individual team members, has driven substantial enhancements in both team-level management and operations as well as overall organizational efficiency.
Image Source: NET Engineering
Impact on the Overall Organization
The agile transformation at Net Engineering has had a profound and positive impact on the overall organization, enhancing operational efficiency, strategic alignment, and overall responsiveness. One of the key improvements has been the streamlined flow of impediments across the organization. Issues are now identified and addressed more quickly, thanks to the agile processes in place, leading to faster resolutions and minimizing disruptions.
Additionally, the role of Scrum Masters has been pivotal in ensuring that the needs and concerns of employees are promptly addressed. This focus on employee well-being and support has contributed to a more engaged and satisfied workforce, which in turn drives productivity and morale.
The introduction of facilitation techniques like Delegation Poker has also significantly improved delegation within the organization. By encouraging structured and thoughtful delegation, these techniques have empowered teams to take ownership of their tasks and responsibilities, fostering a culture of trust and accountability.
Overall, these changes have not only enhanced operational efficiency but also strategically aligned the organization to be more agile and responsive to market demands. The improvements in communication, delegation, and problem-solving have positioned Net Engineering to maintain a competitive edge and continue its growth trajectory in a rapidly changing market.
Impact on Corporate Culture
The agile transformation at Net Engineering has brought about a significant shift in our corporate culture, fostering a more collaborative, feedback-driven, and purpose-oriented environment. A key aspect of this cultural shift has been our emphasis on effective feedback. We invested considerable effort in training everyone in the organization, including newcomers during their onboarding, on the importance and practice of giving and receiving constructive feedback. As a result, feedback has become an integral part of our culture, driving continuous improvement and open communication across all levels of the organization.
Another major cultural milestone was the collaborative creation of our company manifesto. This manifesto, which encapsulates our purpose, identity, vision, and mission, was developed with input from across the organization, ensuring that it truly reflects the collective values and aspirations of our team. The process of writing the manifesto together not only strengthened our shared sense of identity but also aligned everyone around a common vision and set of goals.
These efforts have transformed our corporate culture into one that values collaboration, continuous learning, and shared purpose, making Net Engineering a more cohesive and motivated organization.
Get in touch
To get in touch with NET Engineering visit their website for more informations or reach out to us to get a direct contact with Silvia.
Author
Awarded Ecosystem success Story with the Social Innovation Academy (SINA)
Congratulations to the Social Innovation Academy (SINA) for winning an award at the 2024 Haier ZeroDX Awards! SINA was recognized for creating self-organized and 'freesponsible' learning spaces that empower individuals to drive social change.
Social Innovation Academy (SINA), Uganda, socialinnovationacademy.org
Congratulations to the Social Innovation Academy (SINA) for winning an award at the 2024 Haier ZeroDX Awards! SINA was recognized for creating self-organized and 'freesponsible' learning spaces that empower individuals to drive social change.
As part of our collaboration with the Haier Model Institute (HMI), we proudly supported the 2024 Haier ZeroDistance Excellence Awards by nominating outstanding organizations, individuals, and case studies from around the world. We want to extend our deepest recognition to all participants, who are true pioneers in embracing new management models and fostering ZeroDistance with their customers, suppliers, and communities. Your innovative spirit is shaping the future of business!
I’m incredibly proud to announce that SINA, one of our nominees by the LAP Alliance, has truly earned this recognition through their purposeful work! Their achievements have already been highlighted in Forbes. You can find more details in the recent article „Zeros For Heroes: New Awards For Organizational Innovation” by Bill Fischer.
Discover more about SINA and their Ecosystem Success Story through an introductory video, an insightful interview with founder Etienne Salborn, and access to their case study for download.
If you’re new to Ecosystems and the New Economical Engine read the linked blog post first.
Image source: Mirko Kleiner, contents by Haier
Introductionary Video about SINA
Interview with Etienne Salborn, Founder SINA
This interview was conducted as part of the Haier ZeroDX Awards assessment, with Etienne Salborn, founder of SINA, interviewed by Mirko Kleiner.
What was the problem? How was it identified?
One major cause of hopelessness among youth in Africa is the scarcity of opportunity and employment. In Uganda, an estimated 700,000 individuals enter the labor market each year to compete for around 12,000 positions; it is not uncommon that one formal job announcement attracts over 2,000 applicants. In addition to lack of opportunity, worsening climate-related crises and outbreaks of violent conflict have in recent years created a collective 44 million displaced peoples and refugees on the African continent (see: UNHCR).
“We unleash the potentials of disadvantaged, marginalized young people, as well as refugees, to really become the change they want to see in the world, as social entrepreneurs ”
Amid all of this, Africa’s youth population is expected to double by 2050. Without intervention, African economies will further destabilize, and poverty will continue to increase, condemning millions to lives as passive recipients of aid, or worse. After volunteering at Uganda’s Kankobe Orphanage in 2006, Etienne Salborn came to identify education as a decisive area via which to intervene–but more importantly, to innovate.
Salborn’s initial efforts focused on securing educational sponsorships for as many orphans as was manageable at the time, without which most would likely not have attended high school. However, Salborn would eventually determine that the Ugandan educational system–colonial, traditional, rooted in memorization and obedience–did not adequately prepare its students to compete for an already extremely limited supply of jobs, and even less so for gainful employment with opportunity for advancement.
Who led the change?
In 2013, the first generation of sponsored students from Kankobe Orphanage graduated high school. Although empowered by their education, they had essentially no means of attending university, and faced probable unemployment in a dismal labor market. Instead, through an Open Space dialogue with Etienne Salborn, they became co-founders of the Social Innovation Academy, or SINA, beginning with their indispensable work as co-creators of the SINA Empowerment Framework.
By 2015, this model was in use at Jangu International, SINA’s inaugural campus-community located in Mpigi, Uganda. While its first class of participants (called “scholars”) were developing their social enterprises–innovative self-employment concepts which address community issues or needs through business–they also collectively managed Jangu itself. Operational roles, such as in accounting, logistics, training and outreach, allowed them as much or more influence as had Salborn himself over the growing community and its incoming scholars.
Image Source: SINA
Today, that growth amounts to 18 independently operated SINA communities in Uganda and neighboring countries, currently serving over 900 scholars. Each community is functionally autonomous, able to adapt to its own unique needs, yet all collectively guide and improve upon SINA’s highly replicable model. The result is a self-governing, self-organizing, adaptable, regenerative “community of communities”.
In addition to the dynamic roles scholars take up within their respective SINAs, they are empowered to create their own curriculum, and given access to resources and training specialized to the social enterprise they are developing, before eventually graduating as independent entrepreneurs. A few discover themselves to be well suited toward starting new SINA communities. Although this is not expected of any scholar, in the course of their training all are equipped with the tools to potentially do so if it aligns with their self-identified purpose.
Etienne Salborn’s Master’s program of the University of Innsbruck “Peace, Development, Security and International Conflict Transformation”, administered in Austria, focused sharply on the eliciting of individuals’ potential, as opposed to the prescribing of solutions. His most authoritative act at SINA, then, was to ensure that the organisation distributes authority and runs on the philosophy of freesponsibility. In order to offer a viable alternative to Uganda’s established educational system and change the country’s employment landscape, SINA had also to offer an alternative to the rigid hierarchies and antiquated barriers present in both.
Salborn may indeed have spearheaded this particular movement toward change. The community he continues to advance today, however, is more rightly attributable to itself. With every new cohort of scholars and every expansion, SINA adapts. So, to the question of who led the change, a collective answer: We are all leaders here, and change is constant.
How many teams/individuals were involved?
To reiterate the established timeline: the process of changing education and employment in Uganda began with a small handful of changemaker-makers, including the first class of SINA scholars and Etienne Salborn. Since then, the number of individuals and communities involved has scaled to 18. Altogether, they form a coequal system in which (by design) the scholars run the organisation and manage its functions.
The combined effect empowers scholars psychologically, trains them for their own eventual social entrepreneurship, and leads to improvements in the system benefitting the existing community and future scholars alike. This is one fundamental reason why change for SINA is a constant, not a turning point. It also helps illustrate the regenerative, ongoing nature of its broader community.
Further, the fluid nature of the community and its members’ roles within it are incompatible with attributing specific aspects of change to specific groups and roles at specific times. It is possible, though, to infer strong community expansion and increased scholar intake–and therefore, membership growth–from a basic timeline of SINA’s activity after the establishment of Jangu:
2016: First replication, scholar-organized, within Nakivale Refugee Settlement (Uganda)
2018: SINA community established in Bidibidi Refugee Settlement (Uganda)
2019: SINA community established in a slum area of Kampala (Uganda)
2020: SINA communities established in Kyaka II Refugee Settlement (Uganda) and Tongogara Refugee Camp (Zimbabwe)
2021: SINA communities established in Bukavu and Kinshasa (DRC), Rwamwanja Refugee Settlement (Uganda) and Kakuma/Kalobeyei Refugee Camp (Kenya)
2023: SINA communities established in Njombe and Zanzibar (Tanzania) and Cape Verde
2024: SINA communities established in Kampala (urban refugees), Nyenga, Bombo and Kamuli (Uganda)
Moving steadily forward, growing stronger with every new location, participant or scholar, the “community of communities” is set to continue expanding. In 2025, SINAs will open in Nepal, its first non-African establishment, as well as Rwanda, Nigeria and South Africa. None of this would be the success that it is, if not for the scholars as beneficiaries entering a regenerative cycle transforming from beneficiaries into co-creators and co-owners, running the organization and replicating the SINA Framework further.
What systems and tools were employed?
After starting with its own self-organized system, in 2016 SINA shifted toward the emerging social technology of Holacracy. The shift was a logical evolution of the organisation’s alternative to top-down hierarchies. In Holacracy, authority is distributed. Job titles are replaced with roles. As with the various teams comprising SINA, individuals’ roles can overlap, which aids cooperation and compromise, and nourishes the web of connections present throughout the organisation.
Even new scholars participate in SINA’s Holacracy. Through it, they find themselves directly empowered, not only forging their own paths but contributing–sometimes on multiple fronts at once–to the present and future of theirs and others’ SINA communities.
While remaining grounded in its origins, SINA’s operating structure again underwent a significant evolution beginning in 2019. The symbiosis of people and organisation was further defined and put into practice. New mechanisms for illuminating, dissecting and processing tensions emerged, integrating organisational structure and personal well-being. This included the advent of the SINA-born concept of freesponsibility: exercising freedom with acute awareness of the positive and negative effects of one’s actions (e.g., on self, others, the environment).
What decisions did the team need to make?
As an alternative to a predict-and-control system, SINA’s organisational design works through interlinked, autonomous structures. Accountability in this model applies more to groups as opposed to individuals. The multi-management of SINA also makes it highly transparent, allowing for the constant updating of roles and improvements to the organisation.
As previously discussed, Salborn’s decentralising of authority in SINA set the tone for the community in perpetuity. Following this, all consequential decisions would be made by dialogue and consensus between a combination of (or all) teams. Tensions anywhere in the organizational structure are addressed and relieved in a similar manner. So, aside from that initial rejection of formal authority, the organisation’s operations cannot be attributed to any one decision or individual.
What resources were they given?
This organisation truly started from zero. Individuals within the Social Innovation Academy raised funds as needed along the way. Resourcefulness is at SINA’s core; for example most of its learning spaces were constructed from upcycled plastic bottles. The most tapped resource is human potential and ingenuity, which are not given but rather unlocked.
Did they collaborate with external parties?
No external parties were involved. At most, outside talent (mostly local) was drawn into the organisation, volunteering time, labor, tools and expertise toward practical or structural projects.
What were the most significant challenges and how did the team overcome them?
One particularly significant hurdle to clear was (and remains) to shift the mindset of scholars. Youth arrive at SINA after growing up in a society based on obedience and hierarchy. Many also arrive traumatized. Encouraging them to take ownership and make independent decisions is challenging.
To get scholars past this “confusion stage” (lasting approximately three months from their arrival at any campus-community), SINA incorporates a thorough orientation and mindset-change process. Participants are encouraged to find their purpose and align their plans and actions accordingly. Once this is successful, they become scholars and are gradually introduced to the self-organisational framework.
Maintaining the regenerative cycle of SINA and its stability were challenging as well. Especially as the community grew, the scholar-teacher-entrepreneur pathway needed robust reinforcement, ensuring knowledge and skills are effectively passed down.
Finally, scalability and replication: As SINA grew, it proved complicated to maintain the core values and effectiveness of the original framework. In response, the organisation developed a scalability model which functioned on teams from emerging SINA communities spending time in established ones, learning the framework deeply before replicating it.
Image Source: SINA
What were the impacts?
Impact on User Experience
As SINA’s primary beneficiaries, its scholars are the closest analogue it has to customers. Research shows that these “customers” not only tripled their income on average compared to a control group, but created dozens of social enterprises employing hundreds. Few of them, however, would likely have attained such success if not also for the deep personal transformation facilitated at SINA communities. All told, the SINA Framework not only achieves but exceeds the spirit of zero distance.
Impact on Ecosystem Parties
Various SINA alumni and their social enterprises address critical environmental and societal issues and meet all Sustainable Development Goals (SDGs). Examples of note include Uganics and Tusafishe.
Toward the societal end of the spectrum, Uganics produces a highly effective, organic mosquito-repellent soap. The primary benefit is a reduction in malaria cases and their subsequent associated costs–medical, financial, familial, et al. Moreover, the company has grown to employ around 50 (primarily female) individuals. Lastly, by successfully applying a cross-subsidy model, Uganics is able to make their flagship product available to those who suffer most from malaria. The price of one bar purchased by a tourist or a resort allows for two bars to be sold to a rural customer at an affordable price.
Tusafishe, using large bio-sand water filters, provide safe, clean drinking water to over 300,000 regular customers. Many are schools, refugee camps, and residents of disadvantaged communities. Since the filters themselves use moringa seeds (requiring the planting of moringa trees), and because more filtering leads to less boiling of water, Tusafishe is responsible for the capture or offset of over 50,000 tons of Co2.
Other SINA alumni have launched successful enterprises involving biodegradable drinking straws, upcycled plastic bottles as a construction material, and flooring material made from plastic bags and eggshells. Some have gained international recognition through the African Business Heroes organisation or the UN-Habitat Scroll of Honour Award, and been featured on CNN and the BBC.
SINA, its scholars and alumni, after a decade in practice, comprise a fairly large ecosystem on their own. The array of functions and enterprises associated with SINA brings positive change to the lives of untold thousands of Africans yearly. The community continues expanding without imposing culturally or harming the environment, which allows it to integrate with other ecosystems. All told, the regenerative function of SINA is continually being fed into, allowing for SINA communities to better serve new and future scholars.
Impact on Employees
Although everyone contributes, essentially no one is considered an employee in a SINA community. But, the above quote–from alum Joseph Bwinika of the Nakivale Refugee Settlement–is illustrative of the effect any employer should wish to have on their employees. An exception to formal employment within SINA’s community is the replication support team, SINA Global. Ten members drawn from different SINAs are responsible for activities related to the establishment of new SINA communities and the prosperity of all existing ones.
“I’m living my dream instead of dreaming my life!”
SINA members in general, as confirmed by independent studies, experience an increased sense of agency and self-reliance, and growth both personal and professional. At minimum, scholars go on to earn better pay than they did prior to SINA training. A majority continue with entrepreneurial activities, including owning and operating their own enterprises. In this case, it may be more pertinent to ask how the changemaking patterns of SINA impact the employees its alumni eventually hire, some of whom have never even set foot on one of its campuses.
Impact on the Overall Organization
The manner in which the Social Innovation Academy conducts itself and creates changemakers led to its steady, semi-exponential growth–from 20 scholars at one SINA to over 900 across 18 SINAs within 10 years. The success of the SINA framework’s simultaneous evolution/replication during its first decade has benefitted the organisation immensely. Each instance of recognition it receives, also, benefits the organisation and the entire SINA community: the UNHCR Innovation Award, the Tony Hsieh Award, the Pan African Award for Entrepreneurship in Education, Ockenden Prize, and the Modern Work Award are among its honors.
Impact on Corporate Culture
Traditional corporate culture is somewhat inapplicable or alien to the work and motivations of the SINA community. Naturally, at its current size, the organisation requires formal elements of business (such as accounting) in order to function. And, similar at least to a more modern, enlightened corporate culture, SINA aligns its purpose with that of its members, enabling teams and scholars to work independently yet collectively to solve pressing issues.
However, similar to the question of impact on employees, the answer here lies in the experience of the employees of SINA alumni, not of SINA itself. Even considering social return on investment–like the fact that many employees working at a social enterprise run by a SINA graduate would have otherwise been unemployed–does not account for probable benefits to the work environment itself.
How exactly would one describe a workplace where the person in charge graduated from their entrepreneurial training with a goal to “be the change they want to see”, practices and imparts a concept like freesponsibility, and understands that there is a hard limit to the usefulness of hierarchy? These are traits that managers and executives worldwide might consider adopting.
Statements from SINA Scholars:
“After becoming a refugee in Uganda, I lived a life of struggle trying to contribute anything I could to my family through small and informal business activities. When I joined SINA, my understanding of business changed. From just making profits, I saw how I could also help make the lives of others easier.”
– Rebecca Aime
"SINA is a dream-maker and has made my dream a reality. I realized how best I could use the challenge I had growing up and make a better life for myself but also for the community. It helped me realize that what I faced in the past does not define me but what I decide to do forth is what actually defines me."
– Janet Aguti
"I was a girl not believing in myself. I knew that I am nothing. I wanted to kill myself due to the things I was going through. Here at SINA, it is a place where I was welcomed, no one judged me. People accept you the way you are. I was able to discover myself and my potential, and I healed from the traumas I faced when growing up."
– Barbra Nantongo
"SINA has made me become the person l have been praying to be and restored faith in me to stand, fight and move out of my comfort zones. One of my biggest learnings is that we all need to be proactive rather than just respond to situations. We do need hope, but what we need even more is action. Once we start to act, hope follows.“
– Evode Hakizimana Havyarimana
“Life decided to give me another chance to shine when I joined SINA. I was living a hopeless life as a refugee. I was out of school. I had given up on myself. I believed a refugee could never achieve anything and is supposed to sit and wait for aid. In SINA, I went through personal development and discovered myself and my potential. It opened my eyes and changed the way I see the world. I now perceive challenges as opportunities, which has changed my life a lot.”
– Guilaine Bayubasire
“SINA is creating changemaker-makers like me. I was born in the Democratic Republic of Congo. In 2012, political instabilities forced me to flee to Uganda and I became a refugee. Like many of the 1,4 million refugees in Uganda, I was lost, and broke, not knowing how to sustain. I joined SINA as a beneficiary in 2016. I went through the SINA empowerment model, which has helped me and hundreds of others to overcome fears and unleash potentials we did not even know existed. I found meaning in my previous suffering and motivation to support others in similar situations. Since then, it’s been a powerful journey for me. I became a trainer and facilitator in SINA, and various other roles helped me to grow. I saw an alignment of the purpose of myself and SINA then I co-founded a replication of SINA in Kampala for urban refugees, and later, when SINA Global was created, I joined the team and became a director to foster the global movement of freesponsible and self-organized learning spaces contributing and enabling a whole generation of African youth to create a future for themselves.”
– Emile Kwilyame
Support SINA
To support SINA visit their website for more informations or reach out to us to get a direct contact with Etienne.
Author
Download Case Study
Congratulations to the Social Innovation Academy (SINA) for winning an award at the 2024 Haier ZeroDX Awards! SINA was recognized for creating self-organized and 'freesponsible' learning spaces that empower individuals to drive social change.
Haier - Insights, Learnings and Experiences (Post 4 - The Haier ZeroDX Awards 2024)
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits and collaboration with Haier, and why I believe the future of business lies in a NewEconomic Engine driven by AI and Business Ecosystems.
Post 4 - The Haier ZeroDX Awards 2024
Mirko Kleiner - As a Thought Leader in Lean-Agile Procurement and a Registered Scrum@Scale Trainer, my personal mission is to unite various movements—Agile Leadership, Extreme Manufacturing, Scaling Agile, Lean-Agile Procurement, and more—to push the boundaries of Business Agility across organizations.
One company that stands out, and perhaps the only one of its kind globally, is Haier. With over 50 years of history as a white goods manufacturer, Haier has undergone its sixth major transformation, evolving into a network of over 4,700 Micro Enterprises (ME), all interconnected within Ecosystem Micro Communities (EMC).
Each ME operates with its own balance sheet, its own people, and collaborates closely with partners who share in the ECM’s success. This win-win philosophy, implemented on such a massive scale, is truly unprecedented and sets Haier apart as a pioneer in organizational and management innovation.
For over two years, the LAP Alliance has partnered with the Haier Model Institute (HMI), itself a Micro Enterprise within the Haier Group. Its mission is to spread the word about Haier’s New Economic Engine, or RenDanHeYi, which serves as the foundation of Haier's management model. For those unfamiliar with Haier, it is arguably the most disruptive and successful organization in the world, operating with virtually no bureaucracy and achieving an impressive annual growth rate of 20% over the last decade.
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits to Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
Post 4 - The Haier Zero Distance Excellence Awards 2024 & the Winners
September 20th 2024 the Haier Zero Distance Excellence Awards 2024 have taken place in Qingdao, China. In this post, I’d like to give you a sneak peek about the winners, some behind-the-scenes insights from the pre- and post-events, and introduce you to our four outstanding nominees, one of them has been awarded—each of whom has already implemented a New Economic Engine.
Stay tuned for an inside look at their remarkable journeys and how they are transforming their industries with innovative, user-centric ecosystems.
image source: HMI
Summary of the visit
During the Haier ZeroDX Awards 2024, we had the privilege of experiencing a rich lineup of pre- and post-event activities. These offered valuable insights not only from Haier but also from leaders around the globe. Below is an initial summary of the program, followed by more detailed information about the awards, the winners, and my key takeaways.
I arrived in Qingdao, China, late the day before the official program kicked off, following a journey from the Agile Prague Conference via Dubai and Shanghai. Awaiting me in my room was a delightful surprise: my badge, signifying my official recognition as a Haier Model (HMI) Expert. Holding it for the first time, I couldn’t help but feel a sense of pride. Is it selfish to feel that way? Maybe, but it’s also a moment of deep personal significance.
Image source: Mirko Kleiner
Day 1 - Visiting & Learning from Haier’s RenDanHeYi Lighthouse Practices
It all began with the pre-event on September 19, 2024, where we had the opportunity to visit the Haier Ecosystem Experience Center. There, we learned about Haier's rich history and its six major transformations. Following that, we explored the IoT Smart Home Experience Center, where we experienced firsthand what Haier envisions with real-world user scenarios.
Image source: Mirko Kleiner, contents by Haier
Equally fascinating was our visit to one of Haier's more than 2,000 Quantum Shops, which are deeply embedded in local communities and serve over 10,000 households daily. These Micro Enterprises are part of several Ecosystem Micro Committees (EMCs) and play a vital role in identifying and capturing new customer and user needs.
Image source: Mirko Kleiner, contents by Haier
The day concluded with a visit to one of Haier's Lighthouse Factories, where we had the chance to experience firsthand what mass customization truly means.
Image source: Mirko Kleiner, contents by Haier
I might write separate posts about day 1 experiences and learnings. Stay tuned!
Day 2 - Haier ZeroDX Awards 2024
The main event, the Haier ZeroDX Awards, took place at the InterContinental Hotel in Qingdao on September 20, 2024. It was a dynamic blend of meetings, knowledge-sharing among thought leaders, and recognition of both internal and international nominees. The over 70 nominees, representing six continents and various industries, have all embraced the principles of zero distance. Like Haier, these organizations are management pioneers, eliminating bureaucracy to create flat, open, and highly empowering environments.
The event was moderated by Gary Hamel (Founder of MLab and Visiting Professor at London Business School) and Stuart Crainer (Founder of Thinkers50 and Co-Founder of the Business Ecosystem Alliance). In addition to the awards ceremony, international and Haier’s internal leaders presented the next stage of the New Economic Engine, RenDanHeYi 2.0, including its practical applications. A definite highlight was the opportunity to meet Haier's Chairman and Founder, Zhang Ruimin, along with Zhou Yunjie, CEO of Haier Group.
Day 3 - Discovering & connecting with the city & culture of Qingdao
After the awards, we had the opportunity to immerse ourselves in the local traditions, culture, and environment. Haier offered three unique experiences: Traditional Wellness, a Beer & Culture tour, and a Sailing Adventure.
Overall, the three-day program was an incredible experience, providing numerous opportunities for networking, knowledge exchange, and collaboration between business leaders and subject matter experts. I can wholeheartedly recommend attending. From my personal experience—and I've been to many similar events globally—this gathering had one of the most forward-thinking and progressive audiences I've ever encountered.
The Haier ZeroDistance Excellence Awards 2024
Before the formal ceremony, we had a gathering with the international HMI experts, and I was truly impressed by the depth of knowledge in the room, with experts from all over the world. Even more remarkable was the presence of senior leaders from Haier who joined the conversation. I had the honor of speaking first with Zhou Yunjie, the CEO of Haier Group, followed by an inspiring conversation with Zhang Ruimin, the Chairman and Founder of Haier.
Image source: Mirko Kleiner
To be honest, I was a bit shocked when Chairman Zhang took a seat right next to me, and suddenly, the press swarmed around us. Fortunately, Anika Steiner, who was sitting beside me, and I began the conversation, asking him a few questions and sharing some of our ideas. I have to say, both Chairman Zhang and CEO Zhou are immense figures in driving Haier's New Economic Engine. They are true leaders—highly knowledgeable and an invaluable asset to both the organization and everyone who had the privilege of engaging with them.
Image source: Mirko Kleiner, contents by Haier
Gary Hamel and Stuart Crainer kicked off the event, and we then moved on to announce the winners in the ZeroDX Incorporated category:
Image source: Mirko Kleiner, contents by Haier
raizen from Brazil - Is an integrated energy company with more than 46,000 employees operating across the entire bioenergy production chain. Over the last year, Risen created empowered end to end teams and processes to serve its largest fuel station customers, resulting in a 36 percent reduction in service times, a 40 percent increase in customer loyalty scores, and far less bureaucracy.
SD Guthrie from Malaysia - Is one of the largest producers of certified sustainable palm oil of operations in over 90 countries. The company shifted to a customer focused one stream model, empowering cross functional teams to act autonomously across functions and delivering new customer value.
SeamosUno from Argentina They described themselves as a liquid organization. Founded during the pandemic to rapidly distribute critical supplies to people across Argentina. They revolutionized crisis management by bringing together more than 300 organizations and ecosystem, including religious and social entities and state agencies in a highly networked management model. They allowed autonomous units to work at unprecedented speeds.
Ingersoll Rand from USA - Over the last five years, the company has embarked on a remarkable journey of entrepreneurship at scale. Employees now receive substantial equity ownership and take part in hundreds of empowered cross country teams, which have generated over three billion dollars worth of value.
ASA Group from San Marino - This is a metal packaging company with production sites across Europe specializing in tin plate cans. They employ 500 people and they're implementing micro enterprises and ecosystem micro communities that have full autonomy to decide their strategy, their goals, their investments, profit sharing, and coordinate activity with the group functions.
VARGROUP from Italy - A system integrator with over 3,800 employees across 13 countries in 2023. The company started a journey to become a platform organization and began implementing small independent business units called Micro Enterprise, with their own profit and loss responsibilities, shared service platforms to support these units and ecosystems across the collaboration.
Image source: Mirko Kleiner, contents by Haier
The next category focused on the Benchmark Innovators. These are companies that have embraced the principles of zero distance from their very inception—they were, to quote the famous Lady Gaga song, "born that way." Like Haier, these management pioneers have never been burdened by bureaucracy. Instead, they've built organizations that are flat, open, and highly empowering. And the winners are:
Image source: Mirko Kleiner, contents by Haier
Morningstar from USA - Founded by Chris Rupert, Morningstar is America's and the world's largest tomato processor. At Morningstar there are no managers at all, no titles. Employees negotiate their contracts with each other in what they call a colleague letter of understanding. And they have become a benchmark for self managing organizations around the world.
hoxby from UK- hoxby is a community based feed board. A business balancing profits with social impact and it delivers creative and strategic services with a distributed workforce across 43 countries. hoxbys associates work according to their own work style. Organizing around client needs, full autonomy, and participating in a profit sharing scheme.
„We started hoxby where each person is a micro entrepreneur to prove that everybody can have their work style that fits the unique nature of each person's lifestyle.“
— Alex Hirst, co-founder hoxby
BuurtzOrg from Netherlands/Global - The leading Dutch home healthcare organization. They have a hyper flat structure with more than a thousand teams and ten thousand nurses delivering services across the Netherlands. They have become one of the most benchmark healthcare organizations in the world. They deliver better patient care at lower cost, peer beating service, and there's much to learn from them.
„We focus also on creating healthier & better neighborhoods for people to live in “
— Thijs de Blok, CEO BuurtzOrg International
Social Innovation Academy (SINA) from Uganda - 81 social enterprise in Africa having been born in SINA so far, and we have 16 communities in 6 African countries, that empowers marginalised youth and refugees to become social entrepreneurs. At SINA, participants practice free responsibility, combining freedom and responsibility to create their own curriculum and launch social enterprises within a self organized community.
„We unleash the potentials of disadvantaged, marginalized young people, as well as refugees, to really become the change they want to see in the world, as social entrepreneurs “
— Etienne Salborn, Founder SINA
Image source: Mirko Kleiner, contents by Haier
I’m incredibly proud to announce that SINA, one of our nominees, has truly earned this recognition through their purposeful work! Their achievements have already been highlighted in Forbes. You can find more details in the recent article „Zeros For Heroes: New Awards For Organizational Innovation” by Bill Fischer.
We’ve also published their Ecosystem Case Study here.
Image source: Mirko Kleiner, contents by Haier
The next category is Emergent Excellence. Each change within an organization is significant, but the first step is often the most challenging, the most dangerous, and also the most important. These organizations have bravely stepped into the future, and the winners, hailing from countries such as Poland, Japan, Australia, and others, are:
Image source: Mirko Kleiner, contents by Haier
The winners have been asked some idea or principle that has helped them as they’ve been through this journey.
We focused on the employee's well being and the impact on our sales and our customer service after 30 years later was and still is very positive.
We decided to be radically transparent about salaries, revenue, profit, and people utilization. So people could understand the why behind the decisions.
I think everything started when I fired myself. So firing the boss is the key, so that the rest can really Running company. Getting out of the way.
Change is very hard, you have to start with yourself.
Image source: Mirko Kleiner, contents by Haier
The first round of international awards were followed by a Keynote „Celebrating today to Build the Future“ by Zhou Yunjie, CEO Haier Group.
Image source: Mirko Kleiner, contents by Haier
He spoke about the evolution of RenDanHeYi, Haier’s New Economic Engine, highlighting the reasons for its application and the urgent need for a new management model in the ever-evolving AI era. He also introduced the next phase, RenDanHeYi 2.0, Haier’s updated management model, which likely deserves a separate blog post of its own.
A key inspiration: they’ve shifted one of their core principles from "Zero Distance" to "Zero Boundaries", which now extends to collaboration with suppliers and other ecosystems. There’s so much more to share—wow!
Image source: Mirko Kleiner, contents by Haier
The next category was the ZeroDX Pioneers, individuals who have made outstanding contributions and achievements either in theoretical research and consultation or in practical innovations.
Image source: Mirko Kleiner, contents by Haier
Interesting to mention a new ISO standard is on its way!
Image source: Mirko Kleiner, contents by Haier
The next category was the ZeroDX AI, which aims to acknowledge the outstanding organizations within Haier, that have taken the lead in creating a new economic engine through the implementation of RenDanHeYi model and the zero-distance transformation.
San Yi Nico EMC - Trailblazer Award
EU HVACS EMC - Explorer Award
Image source: Mirko Kleiner, contents by Haier
The awards were followed by another very inspiring keynote by the founder and chairman of Haier Zhang Ruimin. He took as back to the thinking of Peter Drucker, the various industrial revolutions and his point of view of the future of Management.
Image source: Mirko Kleiner, contents by Haier
He outlined the three dimensions of Zero Distance, and I was particularly captivated by the concept of "Zero Signatory". When discussing excellence, he emphasized the idea of self-evolution and emergence—processes that never truly end. What resonated most with me was the focus on human value and a win-win mentality, which Haier takes so seriously that they operate under the principle of "Shareholders Last." Another key point was that even in highly digital organizations, such as those utilizing AI, governance and ways of working are equally, if not more, important. These will become increasingly critical as organizations adapt to new changes and market demands.
One noteworthy aspect of RenDanHeYi 2.0 is its broader inclusion of players beyond just customers. Haier applies the same win-win mentality to everyone, including suppliers, other ecosystems forming alliances, and even communities.
In the afternoon, the New Engine Roundtable Forum provided deeper insights into Haier’s strategic industries, including Medicine, CARtech, and Home Appliances.
It's truly impressive to see the capabilities Haier has developed. For instance, Haier can deliver a personalized car in under 15 days—from order to delivery—thanks to its advanced digital platform, which connects all internal and external ecosystem players in real time, alongside its mass customization capabilities. They can even manufacture different models and car types, from sedans to buses, on the same production line.
Another example, shared by Kevin Nolan, CEO of GE Appliances USA, highlighted how they are taking modular design to the next level, both in their products and organizational structures. They've started partnering with other ecosystems—such as menu providers, shops, and delivery services—which will make them unbeatable in the market.
I may write a separate blog post diving deeper into this later. Stay tuned!
Image source: Mirko Kleiner, contents by Haier
Gary Hamel closed the second day with his signature thought-provoking remarks—no surprise there! Seriously though, he made some excellent points about identifying the current challenges and key leverage points for change in management, organizations, and cross-company collaboration. He emphasized the need to start addressing these areas by engaging with relevant institutions far beyond our usual scope, such as investors, regulators, business schools, and government departments. The idea is to form a movement similar to how the medical community collaborates to combat diseases like cancer. Well, count me in, Gary!
Our Nominees
We are proud to of each of our nominees. You are leading examples with the New Economic Engine:
SINA (Social Innovation Academy) 🇺🇬 w/ Etienne Salborn -> their Ecosystem Case Study
eRevo AG 🇨🇭 energy Revolution w/ Gregor Zust -> their Ecosystem Case Study
Miles AS 🇳🇴 The value-based IT Company w/ Camilla Amundsen -> their Ecosystem Case Study
NET Engineering 🇮🇹 Engineering Agility w/ Silvia Furlan -> their Ecosystem Case Study
We’ll be sharing more details about their Case Study in separate upcoming post of this series, so stay tuned!
Conclusions
This was, without a doubt, one of the best events I’ve ever attended, and I’ve been to many across all kinds of domains. The maturity level of the participants—whether they were business leaders, researchers, or consultants—was exceptional. More people need to see and hear what we had the privilege to experience. The combination of engaging with the most disruptive, world-leading companies and connecting theory to real products and people was outstanding.
Content-wise, I’m a firm believer that the New Economic Engine will serve as a huge inspiration for organizations worldwide. The nominees and winners have proven that these principles are universally applicable, regardless of the size, industry, or culture of the organization. It has also reinforced that we’re on the right path with our movement, the LAP Alliance, but at the same time, there is still so much more to do and learn.
Book references
At the event the following books have been mentioned:
Management Challenges for the 21st Century by Peter F. Drucker
The Fourth Industrial Revolution by Klaus Schwab
Humanocrazy by Gary Hamel
The Startup Factory by Corporate Rebels
Global Business Model Shift by Umberto Lago
The Silicon Valley Model by Anika Steibler
Proximity by Robert C. Wolcott & Kahn Krippendorff
Next Post - Our Case Studies in more Details
Stay tuned for the upcoming posts in this series!
All Posts of this Series
Post 1 - Visiting Haier in Qingdao China
Post 2 - The New Economic Engine
Post 3 - Preview of the Haier ZeroDX Awards
Post 4 - The Haier ZeroDX Awards 2024
Post 5 - The Haier ZeroDX Awards Ecosystem Case Studies
Haier - Insights, Learnings and Experiences (Post 3 - Preview of the Haier ZeroDX Awards)
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits and collaboration with Haier, and why I believe the future of business lies in a NewEconomic Engine driven by AI and Business Ecosystems.
Post 3 - Preview of the Haier ZeroDX Awards
Mirko Kleiner - As a Thought Leader in Lean-Agile Procurement and a Registered Scrum@Scale Trainer, my personal mission is to unite various movements—Agile Leadership, Extreme Manufacturing, Scaling Agile, Lean-Agile Procurement, and more—to push the boundaries of Business Agility across organizations.
One company that stands out, and perhaps the only one of its kind globally, is Haier. With over 50 years of history as a white goods manufacturer, Haier has undergone its sixth major transformation, evolving into a network of over 4,700 Micro Enterprises (ME), all interconnected within Ecosystem Micro Communities (EMC).
Each ME operates with its own balance sheet, its own people, and collaborates closely with partners who share in the ECM’s success. This win-win philosophy, implemented on such a massive scale, is truly unprecedented and sets Haier apart as a pioneer in organizational and management innovation.
For over two years, the LAP Alliance has partnered with the Haier Model Institute (HMI), itself a Micro Enterprise within the Haier Group. Its mission is to spread the word about Haier’s New Economic Engine, or RenDanHeYi, which serves as the foundation of Haier's management model. For those unfamiliar with Haier, it is arguably the most disruptive and successful organization in the world, operating with virtually no bureaucracy and achieving an impressive annual growth rate of 20% over the last decade.
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits to Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
Post 3 - Preview of the Haier Zero Distance Excellence Awards & our Nominees
In less than a week, the Haier Zero Distance Excellence Awards 2024 will once again take place in Qingdao, China. In this post, I’d like to give you a sneak peek of what to expect, some behind-the-scenes insights, and introduce you to our four outstanding nominees—each of whom has already implemented a New Economic Engine.
Stay tuned for an inside look at their remarkable journeys and how they are transforming their industries with innovative, user-centric ecosystems.
image source: HMI
Review - How it all started
During one of our regular calls, the Haier Model Institute (HMI) surprised me with the exciting news that I had been appointed as an HMI Expert and Partner—an unexpected and humbling honor. As part of this new role, I was invited to support the Haier ZeroDX Awards 2024, which I gladly accepted. The international judging panel was tasked with nominating leading individuals, organizations, or cases that have developed a New Economic Engine similar to Haier’s groundbreaking model.
image source: HMI
The ZeroDX Awards are one of the ways the Haier Model Institute (HMI) spreads inspiration about the New Economic Engine worldwide. I was deeply honored to be part of this mission and immediately began reaching out to my global network and clients. Soon after, we convened for the first time as the judging board.
Historically, the Haier Awards primarily celebrated Haier’s own success stories. However, with the inclusion of the international judging board, our goal is to broaden the scope—opening up the Haier ZeroDX Awards to recognize anyone who has applied similar principles of the New Economic Engine, regardless of industry or affiliation.
image source: HMI
Our Assessment
At the core of our assessment was RenDanHeYi and its foundational values and principles. These served as the guiding criteria for evaluating nominees, ensuring that each individual or organization exemplified the spirit of innovation, empowerment, and user-centricity that defines Haier’s New Economic Engine.
image source: HMI
The Haier Model Institute provided us with a comprehensive assessment framework designed to distinguish the good from the truly exceptional individuals, organizations, and cases. As an experienced coach, I’ve encountered many maturity models, but this one offered a fresh perspective, pushing the boundaries of what I had seen before.
Here are a few selected example questions from different domains of the assessment:
Level of Organizational Autonomy - Leadership
image source: HMI
image source: HMI
Level of Organizational Autonomy - Organizational Structure
image source: HMI
image source: HMI
Level of User Value - Ecosystem
image source: HMI
When my colleagues from the Haier Model Institute refer to the New Economic Engine, they are talking about the integration of the AI Economy with an Intelligent and Interactive Ecosystem. At its core is the Zero Distance Organization, where entrepreneurship and the principles of RenDanHeYi form the foundation for a thriving Ecosystem Economy. This combination enables seamless interaction between businesses and users, driving innovation and growth in a dynamic, user-centered environment.
image source: HMI
Our Nominees
We are proud to announce our nominees to the Haier ZeroDX Awards 2024. Four leading examples with the New Economic Engine:
SINA (Social Innovation Academy) 🇺🇬 w/ Etienne Salborn -> their Ecosystem Case Study
eRevo AG 🇨🇭 energy Revolution w/ Gregor Zust -> their Ecosystem Case Study
Miles AS 🇳🇴 The value-based IT Company w/ Camilla Amundsen -> their Ecosystem Case Study
NET Engineering 🇮🇹 Engineering Agility w/ Silvia Furlan -> their Ecosystem Case Study
We’ll be sharing more details about their submissions in separate upcoming post of this series, so stay tuned!
The nominees were evaluated based on the comprehensive values and principles of the Haier Management Model (RenDanHeYi)—the driving force behind success, rapid growth, and win-win outcomes within a partner ecosystem.
image source: HMI
Let’s keep our fingers crossed and wish the four nominees the best of luck at the upcoming awards! Regardless of the outcome, they are already shining examples for their employees, users, and ecosystem partners, showcasing the power of innovation and collaboration.
Big thank you to Bjarte Bogsnes, Paolo Sammicheli, my colleagues on the judging board panel Junhui (Sylvia) Guan Alidad Hamidi David Witney Emanuele Quintarelli Joost Minnaar Ross MacIntyre Saar Ben-Attar William Malek and the whole Haier Model Institute.
Conclusions
I’m always amazed when talking to like-minded leaders; regardless of the industry, region, culture, or size of the organization, they all reach the same conclusions. The connection between a strong Economic Engine, business success, and the positive impact on people / society, and the environment never fails to fascinate me. It makes me wonder—why isn’t this the standard ways-of-working everywhere?
The Haier ZeroDX Awards and the remarkable examples set by its nominees will hopefully inspire more people to adopt this mindset. After all, don’t we all prefer environments built on a win-win philosophy?
I’m really looking forward to meeting my esteemed colleagues from the judging panel, the Haier Model Institute, and all the like-minded leaders from all the nominated organizations.
Next Post - Learnings from the Haier ZeroDX Awards
Stay tuned for the upcoming posts in this series!
All Posts of this Series
Post 1 - Visiting Haier in Qingdao China
Post 2 - The New Economic Engine
Post 3 - Preview of the Haier ZeroDX Awards
Post 4 - The Haier ZeroDX Awards 2024
Haier - Insights, Learnings and Experiences (Post 2 - The New Economic Engine)
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits and collaboration with Haier, and why I believe the future of business lies in a NewEconomic Engine driven by AI and Business Ecosystems.
Post 2 - The New Economic Engine
Mirko Kleiner - As a Thought Leader in Lean-Agile Procurement and a Registered Scrum@Scale Trainer, my personal mission is to unite various movements—Agile Leadership, Extreme Manufacturing, Scaling Agile, Lean-Agile Procurement, and more—to push the boundaries of Business Agility across organizations.
One company that stands out, and perhaps the only one of its kind globally, is Haier. With over 50 years of history as a white goods manufacturer, Haier has undergone its sixth major transformation, evolving into a network of over 4,700 Micro Enterprises (ME), all interconnected within Ecosystem Micro Communities (EMC).
Each ME operates with its own balance sheet, its own people, and collaborates closely with partners who share in the ECM’s success. This win-win philosophy, implemented on such a massive scale, is truly unprecedented and sets Haier apart as a pioneer in organizational and management innovation.
For over two years, the LAP Alliance has partnered with the Haier Model Institute (HMI), itself a Micro Enterprise within the Haier Group. Its mission is to spread the word about Haier’s New Economic Engine, or RenDanHeYi, which serves as the foundation of Haier's management model. For those unfamiliar with Haier, it is arguably the most disruptive and successful organization in the world, operating with virtually no bureaucracy and achieving an impressive annual growth rate of 20% over the last decade.
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits to Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
Post 2 - RenDanHeYi the New Economic Engine
In Post 1 - Visiting Haier, I briefly mentioned the New Economic Engine, and in this post, I’d like to dive deeper into its details. This should also demystify how thousands of Micro Enterprises (MEs) are effectively organized within Haier.
It all began over 50 years ago when Haier’s former CEO, Zhang Ruimin, introduced the first wave of groundbreaking improvements. He firmly believed that true transformation must start at the management level and focus on how people are treated, setting the foundation for what Haier has become today.
image source: HMI
RenDanHeYi an overview
After years of continuous refinement, a New Economic Engine emerged, rooted in the Haier Management Model, RenDanHeYi. It’s important to note that the development of RenDanHeYi is still evolving—and may never truly be "finished." This flexibility and constant adaptation are part of what makes it so powerful and future-proof.
image source: HMI
RenDanHeYi is a blend of three elements: Ren (the people), Dan (user value), and HeYi (the combination of employee and user value). At Haier, there are no traditional employees—everyone is treated as an adult or, as they put it, an entrepreneur. At the heart of all their activities is the user and their needs, whether that’s an internal user or the ultimate customer.
While many companies have shifted towards customer-centric models, Haier’s approach stands out. They place equal value on their employees (entrepreneurs) and users (customers), creating a win-win mindset where everyone, including third-party partners, shares in the success. This goes far beyond traditional gain-sharing models, putting shareholders last and focusing on long-term user relationships rather than one-off transactions.
“We are paid by the user”
— ME Owner
The key to this system’s success lies in the alignment of thousands of Micro Enterprises (MEs). Each ME operates completely autonomously, fully empowered, and accountable to the user—literally, as they often say, "We’re paid by the user." Since each ME manages its own balance sheet, this is very much the reality.
This extreme decentralization is unified by the user scenarios. MEs form Ecosystem Micro Communities (EMCs) to ensure maximum alignment and collaboration. The glue that holds these EMCs together is the EMC contract, which ensures clear roles, responsibilities, and shared objectives.
Strategy lies within the ME
I’ve had the privilege of meeting and exchanging ideas with Kevin Nolan, President and CEO of GE Appliances, a Haier Company, on two occasions. What he shared about Micro Enterprises (MEs) might sound unsettling to anyone unfamiliar with full empowerment. He explained that he's no longer the one to direct or overrule the MEs in terms of strategy, objectives, or decision-making. Instead, the MEs—being closest to the market and the users—are the ones who own and define their strategies and goals.
Can you imagine the speed and motivation this level of autonomy unleashes? It’s a radically different way of working, where those with the most direct insight into user needs are fully empowered to act.
image source: HMI
In fact, under Kevin’s leadership and by applying first principles of the RenDanHeYi model, GE Appliances went from being on the brink of bankruptcy to becoming the market leader in the United States in just a few short years. It’s a testament to the power of this approach, where empowering Micro Enterprises and aligning them with user needs has driven remarkable transformation and success.
image source: HMI
Haier itself has now fully transformed into nearly 5,000 Micro Enterprises (MEs), with a total of over 80,000 entrepreneurs. This shift significantly reduced the need for more than 10,000 middle management roles, creating a streamlined and minimum viable bureaucracy. By eliminating excess layers of management, Haier has built a more agile, empowered organization focused on innovation and rapid decision-making.
3 Rights of a ME
For a Micro Enterprise (ME) to be fully empowered, it must possess three key rights:
The Right to Make Decisions
The Right to Assign Resources
The Right to Reward Performance
These rights enable MEs to operate autonomously, driving their own strategies, allocating resources, and rewarding success, which fuels motivation and agility within the organization.
image source: HMI
These three rights are crucial for enabling the independence of Micro Enterprises (MEs), allowing each to operate like a startup. During their setup and beyond, MEs are enabled by shared platforms for finance, HR, and other resources, as well as initial funding. Interestingly, ME owners and their entrepreneurs can also invest their own money if they choose, further aligning them with the entrepreneurial mindset. Haier only provides a base salary, typically below market average, with the opportunity for entrepreneurs to significantly increase their income by sharing in the ME’s success.
Interestingly, in all my conversations with ME owners, colleagues at the Haier Model Institute, and others, money was never the key driver for motivation. However, the opportunity to be treated as a true entrepreneur, with both the risks and rewards, was a major motivator, showing that recognition and autonomy are what really matter.
A ME Isn’t Enough
As I mentioned in Post 1, Haier and its MEs are deeply focused on user scenarios. Let’s take another example: Smart Cooking. Clearly, no single ME can design, manufacture, sell, ship, and maintain something as complex as an oven. This is where MEs form temporary alliances with other MEs, creating Ecosystem Micro Communities (EMCs). In my conversations with colleagues from the Haier Model Institute, they shared that, in the early stages or RenDanHeYi, many of the Micro Enterprises (MEs) were primarily focused on their own interests and success.
The key tool for aligning multiple MEs is the EMC Contract. This mutual agreement is regularly updated, typically on a monthly basis. It lays out joint objectives, investments, and potential wealth sharing, along with a structured performance management system. What’s truly unique is that if an ME underperforms, it can be replaced—quickly and without hesitation. This may sound harsh, but it has a powerful side effect: it ensures that if an alliance isn’t producing the expected results, the EMC and even the MEs can swiftly reorganize themselves.
The EMC Contract served as the inspiration for our new Lean Ecosystem Canvas, which I'll explain in more detail through the eRevo success story. Thanks to the canvas, eRevo was able to set up their EMC in just a single day!
Image Source: LAP Alliance
This dynamic system eliminates the possibility of “riding dead horses,” something all too common in traditional projects. At Haier, if something isn’t working, the system adapts, reconfigures, and keeps moving forward—ensuring continuous progress.
image source: HMI
Haier categorizes Ecosystem Micro Communities (EMCs) into three distinct types:
Experience EMCs – These focus on interacting with users through touchpoint networks, capturing new user needs to continuously upgrade the user experience.
Solution EMCs – These are responsible for developing specific solutions designed for implementation, iterating based on user feedback to meet evolving needs.
Shared Service Platforms – These provide essential enablement to the EMCs, such as finance, HR, IT, and legal assistance.
A crucial element of Haier’s RenDanHeYi model is the principle of Zero Distance to the User. This means that all EMCs—whether focused on user experience, solutions, or shared services—are encouraged to establish direct contact with users or customers. Everyone in the ecosystem is responsible for staying closely connected to user needs, ensuring that the entire organization remains aligned with the ultimate goal: delivering value directly to the customer.
Example: Internet-of-Food Smart Cooking EMC
The visualization below illustrates how Haier is organized. In this example the overall topic is the Internet of Food, that includes a user scenario around Smart Cooking driven by an EMC. The EMC consists of multiple ME's including external partners.
image source: HMI
The colleagues at the Haier Model Institute shared a fun story about how this particular EMC has extended their mission. Haier has a long history in the appliances business, but what truly sets them apart is their relentless focus on user needs. One day, an employee remarked that while Haier made excellent ovens, it was still difficult to cook a perfect Beijing Roasted Duck—a dish beloved by almost every Chinese household.
Inspired by this insight, a new Micro Enterprise (ME) was born. This ME partnered with the existing Haier Smart Oven ME and collaborated with a "Super Chef" to fine-tune the oven settings specifically for this dish. The result? An EMC that not only improved the user experience but also catered directly to a cultural favorite!
In almost no time, this initiative addressed a significant user need and enhanced an existing Haier product, integrating it seamlessly with their IoT Menus platform and beyond. This rapid response not only enriched the product but also reinforced Haier's commitment to user-driven innovation.
Conclusions
As a senior Agile Coach, I’m deeply familiar with concepts like empowerment, customer centricity, and scaling team-of-teams. With Lean-Agile Procurement, we've extended these values and principles across organizations. However, RenDanHeYi truly represents a New Economic Engine, taking the best of existing practices and pushing them to the next level. What I admire most is its win-win mindset, the profound trust it places in both internal people and external partners, and its unwavering focus on user needs.
You might be thinking, “This sounds impossible in my context!”—but it’s not. In an upcoming post, I’ll share how Haier approaches the transformation in acquired companies and how you can start small and gradually build towards implementing this New Economic Engine, with big ambitions in mind!
Next Post - Learnings from the Haier ZeroDX Awards
Stay tuned for the upcoming posts in this series!
All Posts of this Series
Post 1 - Visiting Haier in Qingdao China
Post 2 - The New Economic Engine
Post 3 - Preview of the Haier ZeroDX Awards
Post 4 - The Haier ZeroDX Awards 2024
Haier - Insights, Learnings and Experiences (Post 1 - Visiting Haier)
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits and collaboration with Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
Post 1 - Visiting Haier in Qingdao, China
Mirko Kleiner - As a Thought Leader in Lean-Agile Procurement and a Registered Scrum@Scale Trainer, my personal mission is to unite various movements—Agile Leadership, Extreme Manufacturing, Scaling Agile, Lean-Agile Procurement, and more—to push the boundaries of Business Agility across organizations.
One company that stands out, and perhaps the only one of its kind globally, is Haier. With over 50 years of history as a white goods manufacturer, Haier has undergone its sixth major transformation, evolving into a network of over 4,700 Micro Enterprises (ME), all interconnected within Ecosystem Micro Communities (EMC).
Each ME operates with its own balance sheet, its own people, and collaborates closely with partners who share in the ECM’s success. This win-win philosophy, implemented on such a massive scale, is truly unprecedented and sets Haier apart as a pioneer in organizational and management innovation.
For over two years, the LAP Alliance has partnered with the Haier Model Institute (HMI), itself a Micro Enterprise within the Haier Group. Its mission is to spread the word about Haier’s New Economic Engine, or RenDanHeYi, which serves as the foundation of Haier's management model. For those unfamiliar with Haier, it is arguably the most disruptive and successful organization in the world, operating with virtually no bureaucracy and achieving an impressive annual growth rate of 20% over the last decade.
In this series of blog posts, I’ll be sharing key insights, learnings, and experiences from my visits to Haier, and why I believe the future of business lies in a New Economic Engine driven by AI and Business Ecosystems.
Post 1 - Visiting Haier in Qingdao, China August 2024.
During one of our regular calls, the Haier Model Institute (HMI) surprised me with the news that I had been appointed as an HMI Expert and Partner—an honor I hadn’t anticipated. As part of this role, I was asked to support the Haier ZeroDX Awards 2024 by nominating leading individuals, organizations, or cases that have developed a New Economic Engine similar to Haier’s. I was deeply honored and immediately began reaching out to my global network and clients. Before long, I had gathered a handful of outstanding candidates—but that’s a story for another post.
Around the same time, I was in the final stages of planning my business trip to Melbourne, Australia. I explored the possibility of altering my return itinerary to include a visit to Haier. Once I got the green light from my travel agency, I quickly contacted my colleagues at HMI. They were thrilled and put together an exciting two-day program for my visit.
Arriving in Qingdao
Despite having traveled to countless countries, this was my first trip to China. I was a bit nervous, not knowing what to expect since I don’t speak the language. I arrived late at night at Qingdao International Airport. Qingdao, considered a small and relatively new city by Chinese standards, still boasts a population of over 8 million. I was immediately blown away by the city's modern infrastructure and quickly fell in love with the rich Chinese culture and cuisine.
1st Day at Haier
On my first day at Haier, I finally had the pleasure of meeting my colleagues from the Haier Model Institute (HMI) in person. We kicked things off with a strategic discussion, sharing experiences, diving into the details of RenDanHeYi, which I’ve explained in more depth in the Post 2 - The New Economic Engine.
After a pleasant lunch, I had the privilege of visiting the Haier Exhibition Center, an experience that truly showcased Haier's innovation and impact.
This is how I was welcomed at Haier—truly awesome! The Haier Exhibition Center is something everyone should experience. Beyond showcasing Haier's rich history, it highlights the four major transformations the company has undergone. A key turning point was the dismantling of the traditional hierarchy, freeing employees and empowering them to act as entrepreneurs—one of the core principles of RenDanHeYi.
This pivotal moment occurred back in 2006, when Haier turned its traditional hierarchy upside down, revolutionizing the way the company operated.
Haier became the world’s first IoT ecosystem brand, and create a new paradigm of global brand in the IoT eary.
As I walked through the exhibition, I struggled to keep up with the overwhelming number of insights, lessons, and success stories. Beyond Haier’s impressive journey of continuous improvement and disruptive changes, I was introduced to their innovative platforms. One standout example is their energy platform, which connects a wide range of energy consumers, producers, and transportation facilities for various types of energy, including gas, oil and electricity.
Imagine a portal capable of managing the energy needs of an entire country—it’s truly mind-blowing. It made me reflect on a recent sourcing project I was involved in for smart meters in gas pipelines, which now seems incredibly small in comparison. What’s fascinating is that Haier’s platforms are designed to empower their Ecosystem Partners, like power producers, allowing them to maintain their independence while benefiting from the platform’s success. It’s a true win-win model, where everyone gets a piece of the pie!
2nd Day at Haier
On my second day at Haier, my colleagues from the Haier Model Institute (HMI) invited me to visit one of their ecosystem partners—a point of sale for consumer goods within the Smart Building user scenario. Just like Haier's platforms and ecosystems, everything is viewed in connection, and their approach to products is no different.
Traditionally, Haier focused on producing and selling individual products, like refrigerators. However, their perspective has evolved. Instead of focusing solely on products, they now design user scenarios, where products are interconnected and work seamlessly together to enhance the customer experience.
An example of Haier’s evolution in the appliance product line can be seen through four transformative waves:
Wave 1: Smart Appliance – Connecting individual products to the internet.
Wave 2: Smart Home – Enabling products to communicate with each other through IoT.
Wave 3: Smart Living – Creating a seamless user experience across all products.
Wave 4: Smart Building – Designing an integrated user experience throughout entire buildings.
This represents just one of Haier's paradigm shifts. Imagine in Wave 4, renting a flat that was fully built, maintained, and equipped by Haier, where all appliances are included in your monthly rent—essentially eliminating competition.
To make this vision a reality, Haier’s Micro Enterprises must collaborate around these user scenarios, continuously adapting and reorganizing based on market demands. In essence, the entire organism consisting of internal and 3rd party ME's becomes fluid, responding dynamically to shifting needs.
The advantage being also a screen manufacturer is that even your point of sale can stand out, creating an inviting and immersive experience for your clients.
In the store, I finally realized just how serious Haier is about their user scenarios. The store was designed like an actual flat, allowing us to walk through and experience different rooms and scenarios firsthand. For example, I could simulate waking up, standing on a smart scale, and receiving my key information directly from the mirror. It was a seamless blend of daily life and technology, showing how deeply Haier integrates user-centric innovation into their products.
By the way, the moment I stepped off the scale, the refrigerator automatically recognized my body metrics and adjusted the suggested menu plan based on the available food. I’m not entirely sure if that’s something I want or if it’s truly necessary, but it was undeniably impressive to see how seamlessly everything works together. Despite being developed by thousands of independent Micro Enterprises, every component is perfectly in sync, showcasing a remarkable level of alignment.
In the afternoon, we had the opportunity to meet with a Micro Enterprise owner for a deeper exchange. What started as a conversation with a few typical questions quickly evolved into a session at the whiteboard, sketching out the organization’s structure and ways of working. That’s a topic worthy of its own dedicated post!
Conclusions
I was already quite familiar with Haier's New Economic Engine and its foundation, the Haier Management Model (RenDanHeYi). However, seeing it in action left me truly blown away. The way it is applied, its profound impact on people, and its commercial success are remarkable.
It’s fair to say that Haier is at least 20 years ahead of any competitor and stands as the most disruptive organization in terms of ways of working. Their unwavering focus on user scenarios, the empowerment granted to Haier’s entrepreneurs and 3rd party ecosystem partners, and the unmatched pace of innovation—both in products and organizational structure—set them apart from the rest of the business world.
Next Post - Learnings from the Haier ZeroDX Awards
Stay tuned for the upcoming posts in this series!
All Posts of this Series
Post 1 - Visiting Haier in Qingdao China
Post 2 - The New Economic Engine
Post 3 - Preview of the Haier ZeroDX Awards
Post 4 - The Haier ZeroDX Awards 2024
"In order to change the rules, you've got to change the mindset."
"In order to change the rules, you've got to change the mindset."
We're excited to share the video recording of Pete Behrens' talk at the World Agility Forum. As part of the "Scaling Agile Across Companies" stream, Pete highlights a crucial aspect: "In order to change the rules, you've got to change the mindset."
Every organization's culture relies on a collection of mindsets, inherited from its history and the dominant beliefs.
Practices, Frameworks and Scaling: A Deadly Combination ?
Practices and frameworks are like recipes—good starting points, but they won’t lead to delivering three-star Michelin cuisine on their own.
These "recipes" are widely influenced by the organization’s culture, like the different spices you could add to achieve very different flavors.
For instance, OKRs* implemented in a company believing that success relies on achieving 100% of objectives might lead to a slow pace and lack of innovation. In contrast, at Google, the culture encourages taking risks and stretching limits, leading to different outcomes from the same framework.
Scaling practices and frameworks without understanding the different teams' or companies' mindset will likely end-up with a lot of misunderstanding and poor results.
The Importance of Culture Fit
Pete emphasizes that we often start by scaling processes and practices, which is the easiest part. He recommends starting by changing the mindset since it will influence all the processes.
At the Lean Agile Procurement (LAP) Alliance, we promote an approach that fosters genuine conversations to address cultural fit between companies, as we believe they are key to overcoming the biggest challenges.
Find more about Agile Leadership Journey
*OKRs Objectives and Key Results is a popular framework to set aligned objectives at all the organization levels
News-Ticker 02/2024
We would like to introduce you to our new NEWS TWITTER. Every month you'll receive 5-10 links to the most exciting news, stories, disruptions, developments, etc. around Agile, Supply Chain, Leadership, Ecosystems, ..
Sustainable Growth Redefined: How IKEA is Pioneering a Climate-Positive Future
IKEA decouples economic growth from environmental impact, achieving a 24.3% reduction in climate footprint from 2016, while boosting revenue by 30.9%.
—> Read the Article (Source scope3.co / Ikea.com)
Some of our conclusions are:
The New Paradigm of Business Sustainability is a booster for revenue. Business Agility and commercial roles such as procurement play an important role to solve bigger problems together across companies.
Year-on-year progress is vital. It reflects a company's ongoing commitment to sustainability, adapting and improving with each passing year.
Ikea’s approach exemplifies the importance of continuous innovation in corporate sustainability strategies.
Sustaining Year-on-Year Progress, each year counts. Ikea's initiatives, from ramping up renewable energy use to enhancing energy efficiency, demonstrate a commitment to making real change, year after year.
The Management Paradigm Driving The World’s Most Valuable Firms
The most valuable and the fastest growing firms today are being managed very differently from average performing firms. The shift is being driven by practitioners: average firms are still catching up. In 2024, it’s time to follow Peter Drucker’s 1997 advice and “look out the window and see what's visible—but not yet seen." A paradigm shift in management has occurred. The new way of managing embodies at least five big shifts.
—> Read the Article (Source: Forbes.com)
Some of our conclusions are:
From the most successful firms can we learn that to solve todays increasingly complex problems, introduce the next innovation, or to survive upcoming competitors a new mindsets and ways of working is required.
Work Is Done By Self-Organizing Teams which requires a new management / leadership.
As Satya Nadell explains the change and the need to improve became part of the business. “the key was agility, agility, agility. We needed to develop speed, nimbleness, and athleticism to get the consumer experience right, not just once but daily.”
Nintendo CEO’s refusal to layoff staff goes viral following industry-wide cuts
"If we reduce the number of employees for better short-term financial results, employee morale will decrease."
said former Nintendo CEO Satoru Iwata, who cut his own salary by 50% and all of the board members cut their pay by 20% so they wouldn't have to lay off anyone
—> Read the Article (Source: NME.com)
Some of our conclusions are:
Good people are very hard to find again and laying them off is based on a very much a short-term thinking
Leaders should ask themselves if the business results are not developing as expected to cut their salary instead
In last consequence even more disruptive companies like e.g. Haier have reduced the hierarchy and instead fully empowered their employees including a cost- and wealth sharing with incredible business results.
Reinventing Procurement: From Cost Center to Innovation Driver
The interview with Todd Heimes of Amazon Business highlights the transformation of procurement teams from traditional cost centers to strategic drivers of innovation. Embracing digital technologies such as AI, ML, and blockchain, procurement is evolving to play a more pivotal role in achieving organizational goals, including environmental and social objectives. Heimes emphasizes the growing importance of hiring tech-savvy procurement teams and the integration of these teams into the broader organizational ecosystem. The interview anticipates a future where procurement becomes more personalized, emphasizing the need for adaptability, collaboration, and innovation within procurement teams.
—> Read the blog post (Source: MIT Sloan Management Review)
Some of our conclusions are:
The necessity to build a Collaborative Ecosystem: not only across functions in the company, such as operations and finance, but also including external companies, such as suppliers and partners. The procurement teams can undoubtedly play a pivotal role in fostering this collaboration.
Agile Mindset for Adaptability: Adopting an agile mindset will encourage procurement teams to embrace change and adapt quickly to evolving technologies, business objectives and resiliency.
Author
Enerkem boosts their procurement process with Lean Agile Procurement for the EcoPlanta project
Learn how Enerkem, an innovative leader of the clean tech, sourced a strategic engineering partner in less than 3 months for deploying their technology at the heart of EcoPlanta, which will produce biomethanol and circular methanol from non-recyclable waste.
Enerkem, a clean technology company headquartered in Montreal, is the global pioneer in the production of renewable methanol and ethanol from solid waste.
Their agile and innovative approach reflects also in their ways of working.
Faced with a critical three-month deadline to select a strategic partner for the design of their new European plant, EcoPlanta, Enerkem adopted an innovative approach with Lean Agile Procurement (LAP) to ensure efficient and rapid collaboration.
In the petrochemical industry, selecting a partner of this magnitude generally takes a minimum of six months.
How did Enerkem manage to select a supplier while accurately assessing the cultural and business alignment between its team and the partner's, thus ensuring a smooth and effective collaboration, all within a timeframe half as long as the standard ?
Watch the video
Download case study.
This case study was also published in the Swiss Magazine Professional association for Purchasing and Supply Management in German & French
Author
News-Ticker 01/2024
We would like to introduce you to our new NEWS TWITTER. Every month you'll receive 5-10 links to the most exciting news, stories, disruptions, developments, etc. around Agile, Supply Chain, Leadership, Ecosystems, ..
How China's BYD Overtook Tesla
Elon Musk’s Tesla has been overtaken by China’s BYD as the world’s top selling electric carmaker. BYD’s rise is the result of long-term strategic thinking by both the company and the Chinese government. And it’s setting up China to be a dominant player in the global automotive industry. Here are the three most important things that have made BYD the king of EVs.
—> Watch the Video (Source Bloomberg)
Some of our conclusions are:
Joint longterm strategy of company, partners and government
Business Agility which allows faster response to market or supply chain disruptions and made the business more resilient
Competitiveness through a high vertical integration, localization of production and in-house development of key expertises
Managing Change Fatigue?
For better or worse, all types of changes – personal and professional, big and small – impact our lives. In this episode of Relearning Leadership, Pete talks about his own experience managing change fatigue as well as how he has seen its effects in our communities, workplaces, and personal lives.
Listen now to hear his three ways in which we can acknowledge and manage how change can be tiring – and how to reframe it to be reinvigorating.
—> Listen to the Podcast (Source: ALJ a LAP Alliance Partner)
Some of our conclusions are:
Change has become multi-dimensional, continuous and exhausting (market disruptions, climate change, changes in society, ...)
Change is good if fulfills a purpose, we can change us but nobody else. Start small yourself.
Accept the things that I can’t change.
Agile Performance Management?
Learn from the global healthcare manufacturer Coloplast how they’ve achieved success with a new performance management approach.
—> Read the case study (Source: BBRT a LAP Alliance Partner)
Some of our conclusions are:
The overall purpose is to create the foundation for unleashing / realizing the company’s full potential. It is actually more about enabling performance than about managing performance.
Budgets were not coherent with the strategy and resulte often in wrong and undesired behavior, needs a lot of time making them, and, on top of that, they are useless a few months into the accounting period
The separation of the budget purposes: Ambition, Forecast, Capital Allocation and Incentives increased the quality of our work substantially, and at the same time, we avoided the problems associated with the annual budget
Agile Contracts - The only Template you’ll ever need!
Agile collaboration became the new normal to deal with the ever-changing demands of today’s business. Often this collaboration isn’t supported enough with an as agile contract.
—> Read the blog post (Source: LAP Alliance)
Some of our conclusions are:
Contracts that embrace Agile values and principles allow for more agile collaboration between parties and therefore better management of uncertainty.
The potential is huge. Compare with the example by the New Zealand Government.
An agile contract isn’t just the Statement of Work ;-)
Author
Trust-Based Development of the COVID-19 Vaccine
Find out why BioNtech, Pfizer and Fogun chose to work together in a trust-based way, rather than what you might expect from a contract. Tim Cummins, President of the WorldCC, along with Ugur Sahin, CEO of BioNtech, shared this story at the World Agility Forum 2024, co-hosted by the LAP Alliance this year.
Find out why BioNtech, Pfizer and Fogun chose to work together in a trust-based way, rather than what you might expect from a contract. Tim Cummins, President of the WorldCC, along with Ugur Sahin, CEO of BioNtech, shared this story at the World Agility Forum 2024, co-hosted by the LAP Alliance this year.
Hear Ugur Sahin, CEO BioNtech speaking about why and how they’ve established a trust-based collaboration with their former competitors Pfizer and Fosun and why this all has resulted in the most successful project ever for all the parties.
Transcription of Ugur Sahin’s part:
“ Indeed, the question is, how can you generate a contract for such a complex project to develop a vaccine, again, a completely unknown pathogen, yeah, where So what we understood is there's no time to make a contract. Contract making requires usually at least six, usually up to 12 months in the pharmaceutical industry.
So we just started with a letter of intention to collaborate. Yeah, it was a few page document describing in a memorandum of understanding the shared vision. The framework of core principle to direct the collaboration, some of them which I had listed in the slide before.
And the memorandum of understanding explicitly provided flexibility to address challenges. And adapt the contract and adapt the principles when the situation evolved. So the only agreement that we signed later on was the development agreement. And, there were other agreements, agreements, which were needed, for example, the manufacturing agreement, the commercial commercialization agreement.
And we did not touch that. So actually the commercialization agreement was signed about 10 months after we started the project, and the problem was in this agreement and also in the manufacturing agreement that it was difficult to describe what we were doing on a daily basis.
Because if you put that into a contract language appears not to fit anymore to the way how we solve the problem. And as mentioned, commercial interests were not a roadblock because they were not the key drivers of this project. So we simply decided that the project is a 50 percent cost sharing and profit sharing collaboration and we will find out later on.
How to sort that in, in detail. I don't know. The only thing that I know is that this task based collaboration was the most successful way of dealing with the project. And, and the project became also commercially highly attractive. For me, the key question is, I strongly believe that all, all task-based collaborations there which would use the same type of model would be much superior, than collaborations which are based on control.”
Watch the Recording
FREE Download of the Slides
Expect other case studies from all around the world in this series.
Speaker Bio
Tim Cummins, President at World Commerce & Contracting
Thank you!
Ab big thank you goes to our sponsor apd.coach for taking care of the post production of all these videos
Autor
Awarded success Story with the Dunedin City Council
The Dunedin City Council won an award for Outstanding Cooperation & Collaboration at the 2023 World Commerce and Contracting (Asia Pacific) Innovation and Excellence Awards – Congratulations to both the team and the new partner!
Dunedin City Council, New Zealand, www.dunedin.govt.nz
The Dunedin City Council won an award for Outstanding Cooperation & Collaboration at the 2023 World Commerce and Contracting (Asia Pacific) Innovation and Excellence Awards – Congratulations!
“ I’ve awarded many, many contracts, but I’ve never been hugged by a vendor at the end of it, when I told him that he won the contract. That tells you something. ”
The award was for a Lean-Agile Procurement (LAP) process the Dunedin City Council (DCC) undertook to source a Contract Lifecycle Management System, and the outstanding way DCC and the successful vendor/partner, Portt, collaborated through the lean-agile process to achieve their goals.
Procurement at Dunedin City Council
The Dunedin City Council represents the people that live in Ōtepoti Dunedin, New Zealand. The DCC’s purpose is to enable decision making by and on behalf of communities, and to promote social, economic, environmental and cultural wellbeing.
Public dollar spend makes up a significant proportion of the NZ economy, including spend from local government organizations like DCC. The DCC has an important responsibility to ensure it spends rate payers funds prudently through its procurement processes – in an open, transparent and accountable way. DCC follows the NZ Government Rules of Procurement. When procuring Goods or Services, they use the NZ Government Electronic Tendering Site (GETS) to list all open market tenders. This site enables registered users to electronically review and respond to all current open market tenders being conducted by the Council.
One of DCC’s procurement rules is that procurement with a cumulative value of over $100,000 requires an open and competitive process, which typically takes over three months.
Why Dunedin City Council used a Lean-Agile approach
Previously, DCC had faced challenges sourcing Software as a Service (SaaS) through a traditional open market Request for Proposal (RFP) approach, with a few complex SaaS contracts resulting in vendor/partners that could not deliver on requirements.
The DCC was going through a Contract Management improvement project, which included sourcing a Contract Lifecycle Management (CLM) system and wanted to ensure the same situation did not occur again as with previous SaaS procurements. This was a strategically important project for DCC, and therefore success was paramount.
It was important that the CLM system sourced met the Council’s requirements to ensure the success of the wider Contract Management improvement project.
When DCC was looking for a way to maximize the success of the procurement process to ensure the right outcomes were achieved, they began looking into the Lean-Agile Procurement approach as an option.
Dunedin City Council’s Lean-Agile Approach
To source the CLM system, DCC decided the contract was complex enough to use a Lean-Agile Procurement approach.
DCC undertook a two stage procurement process.
Stage one was an open market Registration of Interest, using GETS(fn). This was done for two reasons:
1. To comply with DCC’s Procurement and Contract Management Policy.
2. We didn’t know what we didn’t know and didn’t want to miss out on new or emerging technology that we hadn’t uncovered through our market research (aka we had FOMO!).
Following stage one, DCC shortlisted three vendor/partners for the second stage of the CLM Software procurement.
Stage two was a two day workshop ‘Big Room Event’ utilizing Lean-Agile Procurement techniques. As it was DCC’s first Lean-Agile Procurement process, we engaged Ross Darrah from Pareto Toolbox, as an expert in LAP, to assist and coach the DCC team through the process.
Image source: Dunedin City Council - DCC and Pareto Toolbox presenting to Lean Agile Procurement Canvas during the DCC LAP Process.
It was acknowledged that LAP was a new process for vendor/partners and DCC stakeholders, and particularly as this was being conducted in a public sector environment, probity was absolutely crucial. The DCC team and vendor/partners were therefore coached and fully briefed on LAP, to ensure full understanding of the process and to give confidence to all stakeholders and vendor/partners that they were involved in a ‘safe’ process which was fair, transparent and complied with required public sector regulations and probity standards.
The DCC team fully embraced the LAP process and focused during the two days on getting to know the shortlisted vendor/partners. It was important for DCC to understand how the respective vendor’s approach would work for DCC and the capabilities of their CLM solutions.
During the two days of the LAP process, DCC and shortlisted vendor/partners approached the event as an opportunity to start building the relationships.
Business Outcomes Achieved using the Lean-Agile Approach
In adopting a Lean-Agile Procurement approach, DCC achieved accelerated decision making and cut down the time and cost required for vendor/partners to do business with DCC. It also enabled strong relationship building between DCC and the successful vendor/partner – setting a solid foundation for the delivery of the work.
Image source: Dunedin City Council - Serge Kolman, DCC Procurement and Contracts Manager presenting to vendor/partners on day one.
The CLM solution was delivered on time and within budget. The success of this contract can be attributed to the innovative procurement approach, effective project delivery, and the willingness of DCC staff to try new ways of working that benefit DCC, its vendor/partners, and the Dunedin communities they work for.
There were some doubts voiced by vendor/partners prior to the event, as this was the first Lean-Agile process DCC and the vendor/partners had participated in. However, the feedback from staff and all vendor/partners involved was overwhelmingly positive - even from the vendor/partners who were not successful!
Key Learnings, Tips and Takeaways
Investment Logic Mapping
Once the CLM software contract was awarded, and as part of the implementation phase, DCC undertook an investment logic mapping (ILM) process with the successful vendor/partner, Portt.
The ultimate aim of the ILM process was to get to the core of the problems we are trying to solve by developing problem statements and identifying the benefits of solving those problems.
Image Source: Dunedin City Council. - Natalie Strong, DCC Procurement Advisor and LAP facilitator updating the LAP canvas during canvas review with DCC staff and shortlisted vendor/partners.
DCC found this process valuable, and they would in future undertake an ILM exercise with key staff and stakeholders before they went through a Lean-Agile Procurement process, as this would inform the canvas (true north) and User Stories by developing problem statements and can be used to measure success of Lean-Agile process.
Working with Vendor/Partners to solve Problems
DCC found it very valuable to have the ability to talk through issues and challenges with vendor/partners, who then demonstrated how they could help solve these problems in real time.
Two Days vs Three Days
DCC felt like they would benefit from one more day, to feel less rushed.
A great outcome can be achieved by doing a Lean-Agile process in two days, but DCC felt like they would get a bit more out of the process if an extra day was included.
Online vs In-Person
Lean-Agile Procurement works best with people in the room, online presence is fine but to be really successful DCC found that physical presence was best.
Tips for other Procurement Leaders
Embrace the process. DCC have found Lean-Agile Procurement to be a really useful tool to have in the procurement toolbelt for the right project.
Ensuring you engage early with decision makers within your environment is essential to the success of the process. Engage early to enlist the support you need (including from decision makers with financial authority) and to enable and achieve the full benefits and potential of a Lean-Agile process.
Time Management & Peer Feedback
A key learning from the Lean-Agile Procurement event was the importance of time management. As already stated, there was a lot to achieve in two days, meaning that sticking to agreed timeframes was of utmost importance. To mitigate this challenge, we ensured that vendor/partners were clear about timeframes up front and this was reinforced throughout the event. In addition, vendor/partners (and DCC stakeholders) were kept on time by using a timer and alarm. This ‘refereeing’ of the event ensured that the time was maximized.
The strict keeping of time added an additional benefit. It ensured there was sufficient time to provide immediate feedback to vendor/partners to ensure they knew where they stood and made the event a success. This also ensured respect was given to vendor/partners, that is they were held to time but they were provided with feedback on where they needed to improve.
Current Trends & Crisis in Procurement - How to integrate this with Lean-Agile Procurement
The world has become very unpredictable (supply chain disruptions, inflation, ..), new trends arrive every other day (ESG, circular economy, sustainability, diversity, ..) while the demand in procurement is increasing. So how to integrate all this, and do we need to adapt anything in Lean-Agile Procurement?
The world has become very unpredictable (supply chain disruptions, inflation, ..), new trends arrive every other day (ESG, circular economy, sustainability, diversity, ..) while the demand in procurement is increasing. So how to integrate all this, and do we need to adapt anything in Lean-Agile Procurement?
Many procurement organisations and it's professionals are getting overwhelmed by the unpredictability, new trends and increasing demands.
The only thing we can predict: Things are unpredictable.
—- Tim Cummins, President World Commerce & Contracting
Let's take one of the latest trends in procurement - ESG (Environmental, Social, Governance). It is currently one of the top priorities in the c-suite, a head of ESG is often hired, etc. Don't get me wrong, ESG deserves its place and procurement needs to embrace it. However, my observation of the day-to-day work of procurement professionals doesn't really change anything. They are still following their internal procurement process, so that such an important topic never really scales.
So the question is how to scale new trends and integrate current challenges such as supply chain disruptions, rising prices, etc.?
Well, by applying Lean-Agile Procurement we work cross-functional. This allows us to invite experts into the team as needed. While the aim is always to enable the team members in all new topics. This allows any new issue to be scaled across the organisation over time.
In additon, the Lean Procurement Canvas is a nice summary of the key aspects of a strategic sourcing case and drives the right conversations. To take this to the next level we've added some new questions to the "Cheat Sheet" that relate to the current trends/crises such as ESG.
We look forward to your feedback!
Free download here (Bottom of homepage)
Author
Roche - The Agile Journey of Roche Procurement
Most have heard of ‘Agile’ by now and the theory sounds promising - to setup your organisation, team and ways of working to be ready to respond and innovate quickly in a world that is changing at an unprecedented speed. In Procurement and Contracting, the Agile success stories that come from IT and App building can feel remote and hard to translate to our world. In Roche, these pressures sit alongside the need to constantly bring ‘value beyond savings’ from suppliers and contracting. Join Colm Diamond and Mirko Kleiner spoke at the European Summit 2022 of the WorldCC about Roche’s journey on how the Procurement and Contracts function are changing their structure, how they think and how they work fundamentally to try to get Agile to work for them and how it’s going in reality.
Roche - Global
Colm and Mirko were invited to talk at the European Summit of the World Commerce & Contracting about the Agile Journey of Roche Procurement. It’s an inspiring session where Colm is giving us with several stories some insights in the new ways of working at Roche Procurement.
The slide deck
The Slide Deck could be #free download here: https://bit.ly/3tQwfGy
More about the Speaker
Colm Diamond, Productivity Lead, Global Procurement, Roche
Agile Contracting in Banking using Lean-Agile Procurement
In this case story, Rivo Head of Procurement at Candriam shares how Lean-Agile Procurement was used to procure a complex solution in banking, in the matter of weeks not years.
In this case story, Rivo Head of Procurement at Candriam shares how Lean-Agile Procurement was used to procure a complex solution in banking, in the matter of weeks not years.
Panelists
Rivo RANDRIAMANANJARA
Head of Procurement at Candriam
https://www.linkedin.com/in/randriamananjara/
Mattias Skarin
Lean & Kanban Coach, crisp.se
https://www.linkedin.com/in/mattiasskarin/
Source of video: https://blog.crisp.se/2022/04/04/mattiasskarin/agile-contracting-in-banking-using-lean-agile-procurement
Agile Contracts - The only Template you’ll ever need!
Agile collaboration became the new normal to deal with the ever-changing demands of today’s business. Often this collaboration isn’t supported enough with an as agile contract.
Agile collaboration became the new normal to deal with the ever-changing demands of today’s business. Often this collaboration isn’t supported enough with an as agile contract.
In this blog post you’ll learn about the only template you’ll ever need.
Agile Collaboration - Houston we have a problem!
With Lean-Agile Procurement we’re fostering collaboration and co-creation of e.g. the solution design, a joint agile roadmap, the proposal, etc. between all parties even before signing a contract. This is also because it turned out that the social- and cultural fit are as important success criterias, then the business fit. Nobody chooses his partner in life just because of her/his looking too. If we’re looking closer to an agile collaboration we’re constantly re-agreeing because of an ever changing environment. The interdisciplinary team consisting of internal- and external people is e.g. re-agreeing and improving their collaboration model, their joint agile roadmap, their joint business objectives of the next iteration, down to the concrete implementation of a customer need, etc. with every feedback cycle. These good practices e.g. applied with the help of Scrum became the new normal. So all good? Unfortunately not, Houston we have a problem!
The problem is that a lot of agile cross-company delivery teams lack of a legal foundation based on agile values & principles, that supports this kind of agile collaboration. Furthermore there hasn’t been a „standard“ yet, what an Agile Contract really is and what not. This made it difficult to onboard the legal community and even worse created an even bigger confusion in the agile community.
The Solution - The only template you’ll ever need!
The easiest solution for defining a standard would be creating a, or even better THE template of an Agile Contract. This has served us very well up till now, where the things have been predictable. As Agile Collaboration tries to embrace uncertainty every contract became very contextual. To put it on one extreme: Sometimes the only thing we have is a vision like e.g. how Artificial Intelligence (AI) could support our business?-So time-n-material is the only way to go?-A clear NO!-T+M is just one possibility. But there is a whole spectrum of potential agile contract types e.g. driven by the level of risk-sharing.
The only solution for a standard left is to take it to the next level of abstraction: Values & principles. Please welcome the Agile Contract Manifesto (ACM), created by a global group of experts from agile-, commercial- and legal communities.
It consists of 4 main values..
Image source: agilecontractmanifesto.org
.. and 10 principles
Image source: agilecontractmanifesto.org
ACM in Practise - How to apply the ACM?
Similar to an Agile Contract are values & principles contextual too. So as a first step it’s recommended to create a joint understanding. The easiest is e.g. by sharing examples. Then you could take an existing „agile“ Contract and assess and improve it based on the ACM. It’s recommended to include all parties in that exercise such as e.g. Product Owner, delivery team members, agile coach or Scrum Master, lawyer, etc. as development of this legal foundation becomes a team effort as well to create the maximum ownership and minimizing risks at the same time. Tipp: Check out the Lean Procurement Canvas, which gives a lot of guidance to ask the important questions.
Furthermore it’s very important to understand that an Agile Contract is not just the Statement of Work (SoW). It includes all parts of a contractual framework such as e.g. None-disclosure Agreement (NDA), General Terms & Conditions (GTC), Master Service Agreement (MSA), etc. If you think of e.g. your latest NDA you’ll agree there’s a lot of improvement to assign agile values.
Conclusions
In other words if Agile Contracts embrace the values & principles of the ACM we could create an even bigger impact than just supporting a more agile collaboration. The potential is huge. Take the example of an outcome-based contract by the New Zealand Government. They took the outcomes of the partnership to society and sustainability into consideration of the services and goods they’re buying. Read more about it here: https://bit.ly/3H1iFnw
Become part of this movement and sign the ACM: https://bit.ly/34IVuS7
Be the change you wanna see in the world. As an agile coach / Scrum Master get in touch with your legal team or the other way round!
Wanna become an Expert in Agile Contracts?
The LAP Alliance offers a unique Certified Advance LAP Module on the topic, where you learn the different agile contract types, how to apply the ACM and coach your peers in this important topic.
Find out more, or register: https://bit.ly/3I0B6tM
ACCONOLOGEMENT
A Big thanks goes to my peers of the ACM Creators Group!
Author
Sources:
Original Article in German flowdays.net
Scaling Agile beyond Companies
In this article you’ll learn why Tesla never had a chip shortage, how you could select new strategic partners in DAYS instead of Months and so how to start scaling agile beyond your company with your preferred Agile Framework and Lean-Agile Procurement.
The Covid-19 crisis made it obvious we are at risk if we don’t manage our dependencies to our suppliers and partners along the whole supply chain. They are an essential part of our value stream/s we need to take into consideration to achieve true Business Agility. In other words we are only as agile as our partner ecosystem is.
In this article you’ll learn why Tesla never had a chip shortage, how you could select new strategic partners in DAYS instead of Months and so how to start scaling agile beyond your company with your preferred Agile Framework 1 and Lean-Agile Procurement 2 (Short LAP).
A retrospective - Scaling cross-Company today
If you’re not an agilist you need to know that out of good practices a number of scaling frameworks have evolved in the past years. You might have heard of SAFe1.1, Scrum@Scale1.2, the Spotify “Model”1.3, Agile@Scale DA1.4, LESS1.5 or NEXUS1.6. The purpose of all of them was to scale the benefits of aligning around value with cross-functional teams to the whole organization.
Find out more about the benefits of these scaling frameworks in the Annual State of Agile Report.
Where are the suppliers in the Agile Scaling Frameworks?
The suppliers are basically treated as team members, full cross-functional teams or even integrated services. Depending on the business suppliers might have other important roles e.g. as advisors in the portfolio, etc.
Image source: compare with framework references
In other words, all the frameworks like to apply the same values & principles to our suppliers and partners, which is very good at least in theory :-)
Find out more about suppliers in agile in the article suppliers@SAFe.
Reality check - Top 3 challenges with suppliers while scaling agile?
Challenge 1: Who’s responsible for the suppliers?
In non-agile organizations the commercial functions such as sales, procurement, partner management, etc. have been responsible for the supplier management. To be honest the agile community hasn’t really found a more agile way for most of those tasks and responsibilities yet. They are mainly treated as shared services. In the best case they’ve visualized their work via a Kanban Board or started to experiment with Scrum. If you think of your latest negotiation you’ll agree that they are far away from applying agile values yet.
Image source: scrumatscale.com
To be fair, good Scrum Masters or on higher level Scaled Scrum Masters have taken over some of the tasks to e.g. manage a supplier, the contracts, etc.
“Procurement & Sales are responsible for up to 80% of a Company’s revenue”
The potential is huge if we think of the fact that procurement and sales are responsible for up to 80% of a company’s revenue!-Imagine the direct business impact, if we could improve time-to-market by just some percentage?!
Challenge 2: How to select key partners?
In Portfolio Management where often the need for a new strategic partnership is defined today we’re using e.g. the Business Canvas. The canvas has a section “Key Partners”, but there’s no approach based on agile values & principles to find and select those.
Image source: strategizer.com
Find out more selecting a partner in agile e.g. in the article Strategic Vision & Backlog Prioritization in Scrum@Scale.
Challenge 3: How to align contracts with Agile collaboration?
The global annual State of Agility in Procurement & Supply showed that 78% of professionals in commercial functions have less than 3 years experience in Agile Contracts.
Image source: LAP Alliance
In other words even if the parties like to collaborate in an agile way they most likely suffer from a good legal foundation.
Find out more in the article Agile Contracts in SAFe or download the full report about the State of Agility in Procurement & Supply here.
Scaling cross-Companies with Lean-Agile Procurement!
Let’s find out what we could learn from DevOps, how you’ll improve time to market by 400-800% applying Lean-Agile Procurement to your supplier selection approach and how all of this will help you in scaling agile cross-company.
History
Traditional sourcing approaches are transactional 3, where the buyer side defines the scope and the supplier side offers a solution incl. price for it. This process called Request for Proposal (short RfP) hasn’t really changed in the past 120 years. If applied to complex cases such as e.g. introducing a new ERP system with a new partner it delays time to market by 6-12+ months on average 4. The main reason is that all the details in scope e.g. new business processes, technical integrations, etc. can’t be foreseen in a reasonable amount of time or will change as we go.
Lean-Agile Procurement in a Nutshell
Lean-Agile Procurement (short LAP) was invented to introduce an approach to find and select a key partner based on agile values & principles in DAYS instead of months. The selection is highly collaborative, similar to a PI-planning having all the right people from all parties -even competitors- in the same room co-creating their proposals and an agile contract together. LAP has become the global standard, winning in 2020 the World Procurement Awards with the success story “Sourcing an ERP System in just 2 DAYS” 4 and is currently changing the view on Business Agility.
Of course will the sourcing of all the simple to complicated staff such as e.g. stationary be digitized. Those so-called operational tasks are up to 90% of such centralized services. In other words the sweet spot of LAP is complex or strategic sourcing 3.
The Agile Team redefined
After more than 5 years experience applying LAP in every industrie it became obvious that in a truly agile organization consisting of team-of-teams e.g. procurement, sales and partner management will become additional capabilities every agile team needs to have. Some people call LAP “DevOps on Steroids” or just the next logical evolution of it.
“Lean-Agile Procurement is like DevOps on Steroids!”
In practice this means we add all capabilities we’ll need to define strategy, customer needs, sourcing strategy, delivery, operation and even to contract to an agile team. In other words the agile team gets full ownership over the product livecycle. While applying LAP e.g. in Banking it turned out that compliance is a huge roadblocker, so we added somebody from compliance to the team too.
Image source: LAP Alliance
A further advantage of such an end-to-end agile team or team-of-teams is that we overcome the transactional nature of e.g. sourcing. As we all know handovers are always a risk, delaying time-to-market, etc.
The Lean Procurement Canvas
LAP doesn’t make the existing sourcing process more efficient. Instead the focus lies always on being effective – doing the RIGHT things. In an uncertain environment this also means saying goodbye to detailed specifications, and accepting that anything can change at any time. In today’s smart business development scene the Business Model Canvas 5 is a living document and 100-page business cases are a thing of the past. LAP demands the same for defining a partnership, and the Lean Procurement Canvas 2 provides it.
Image source: LAP Alliance
The canvas is divided in the right / left side, where on the right the customer or buyer side is represented and on the left we gather the information about the partner or supplier. The four main sections are about the WHY <> WHAT <> HOW. As an integral part of the canvas we also define the WHO or the people from both parties that will collaborate. A social- and cultural fit turned out as a very important success criteria for any collaboration.
For more details download the cheat sheet or start with it in your favorite tool Mural.co / Miro.com.
““By focusing to the customer needs Tesla never ran into a Chip shortage””
During the Covid-19 crisis the big German car manufacturers ran and are still running into huge shortages e.g. in Computer Chips. Main reason was that their sourcing strategy was based on lean principles only. They in fact had prefered suppliers for each component and the component was exactly defined with focus to the HOW and the lowest price. With LAP we focus on the buyer side on the WHY and WHAT and wanna stay as agile on the HOW and with that also on the supplier. Following this principle Tesla never ran into that problem until today.
“The Lean Procurement Canvas is an Agile Contract”
it turned out that the Lean Procurement Canvas is to most lean Agile Contract beside a verbal agreement.
The Canvas can be used by startups, corporations who would like to:
Setup and align a new internal, mixed or outsourced 3rd party agile product delivery team
Co-create an agile agreement with multiple vendors in the same room simultaneously
Assess and manage existing teams or partnerships with 3rd parties
Close a deal more effectively as a vendor
It has been used by Air France KLM, Gazprom, BNP Parisbas, Auckland Council and many more from the private and public sector.
SAFe / Scrum@Scale / etc & LAP Approach - Source a key Partner in Days!
Let’s see how all fits together and how you could source a key partner in DAYS too!-The LAP Approach has four generic steps that need to be implemented in every context differently. The Lean Procurement Canvas is our guiding tool, while it is by definition a living document throughout a partnership and can always just be a summary. We usually end up with a ton of attachments to it such as e.g. personas, a user story map, collaboration model, contractual framework, etc.
To make it more clear, find the following four generic steps of the LAP Approach and some explanation how this could fit into SAFe, Scrum@Scale and the Spotify “Model”.
Image source: LAP Alliance
Find out more about the Big Room Workshop/s in LAP in the Article Big Room Workshop.
Business Outcomes with Lean-Agile Procurement
CKW a swiss Energy Company together with flowdays, won the 2018 CIPS-Europe award 7 at the Budapest ProcureCon event. Find some empirical data from that success story to get an idea about the business outcomes with LAP in comparison to traditional sourcing approaches.
Time-to-market was radically improved from 4 months to 4 weeks while the efforts could be cut in half. Through focusing to prioritized customer needs and talking about any risk / concern, etc. while the big room workshop we’re able to improve spent by 80%. The agile team assessed not just the best product, but the full package including the best social- & cultural fit. 9 out of 10 recommended the LAP Approach, even the shortlisted vendors that didn made it.
In terms of delivery the project was a success too. The jointly agreed objectives have been overachieved within the initial budget and time. In fact the team was faster as expected and could add more to the initial plan.
Beside the success of the project with LAP we deliver value faster and create the business outcomes earlier, which often means millions depending on the case.
Conclusion
Lean-Agile Procurement extends the point of view of Business Agility to the external partners and fosters a thinking of Adaptive Partner Ecosystem 6 instead of a static supply chain. Where the agile team is the core of an agile organisation and needs to extend their capabilities with procurement / sales / partner management skills to own the whole product life cycle.
Also it gives an answer to the 3 challenges with suppliers in scaling Agile frameworks and applies the same principles of co-creation as in e.g. a PI-Planning to sourcing and partner management, while an agile contract is more seen as the result of the agreement developed in the Big Room Workshop.
Agilists applying any of the existing Scaling Frameworks have the potential to become pioneers by creating much bigger business impacts faster by scaling agile cross-company with Lean-Agile Procurement.
More than that, a pilot with LAP is also a very good starting point for a company becoming agile. In most of our success stories the company wasn’t agile yet, or not yet in the leadership and for sure not in Procurement nor Sales. The urgency of a strategic sourcing case helped to get the management support and as with an end-to-end agile team we’re introducing a flavor of agility in every function LAP turned out as a very good catalyst!
Autor
References
(1.1) Scaled Agile Framework by Scaled Agile
https://www.scaledagileframework.com
(1.2) Scrum@Scale by Scrum Inc. Jeff Sutherland
(1.3) Spotify “Model” by Spotify
https://engineering.atspotify.com/2014/03/27/spotify-engineering-culture-part-1/
(1.4) Agility@Scale by Disciplined Agile - PMI
https://www.pmi.org/disciplined-agile/agility-at-scale
(1.5) Large-scaled Scrum by The LeSS Company B.V.
https://less.works/less/framework
(1.6) NEXUS by Scrum.org
https://www.scrum.org/resources/nexus-guide
(2) Lean-Agile Procurement & Lean Procurement Canvas by LAP Alliance, https://www.lean-agile-procurement.com
(3) Strategic sourcing process outlined via https://en.wikipedia.org/wiki/Strategic_sourcing
(4) “SwissCasinos case study”, SwissCasinos & flowdays, 2020 https://mailchi.mp/flowdays.net/procurement-award-winner
(5) Business Model Canvas, Alex Osterwalder https://www.strategyzer.com/canvas/business-model-canvas
(6) Adaptive Partner Ecosystem by Mirko Kleiner 2018
(7) CIPS Supply Management Awards Europe 2018 - Best Procurement Consultancy Project
https://www.cips.org/en/supply-management/news/2018/october/dwp-triumphs-in-cips-sm-awards-europe/, https://flowdays.net/de/blog-de/2018/10/22/medienmitteilung-ckw-amp-flowdays-gewinnen-supply-management-award-2018-europe
“Lean-Agile Procurement is like DevOps on Steroids”