On September 17, the fifth forum on the “Human-Unit Integration Model” was held in Qingdao, themed “Experience Iteration and Value Circulation.” This forum was jointly hosted by Haier Group and Gary Hamel’s Management Lab (MLab), attracting global experts, scholars, entrepreneurs, and media personnel, including 2006 Nobel Laureate in Economics, Edmund Phelps, to discuss management and brand paradigm shifts in the IoT era.
The future competition will unfold between “ecological brands,” and all enterprises will face a fundamental choice: to become an ecological brand or to join an ecological brand. At this forum, the Chinese edition of the Harvard Business Review, Kantar, and the Saïd Business School at the University of Oxford jointly released the “Ecological Brand Certification System,” which will lead more enterprises globally towards the transformation into ecological brands.
From “Business Ecology” to “Ecological Brands”
Over twenty years ago, American scholar James Moore introduced the concept of “business ecology” in an article published in the Harvard Business Review, titled “Predators and Prey: A New Ecology of Competition.” Moore argued that the term “business ecology” should replace “industry” across multiple sectors, and strategic formulation should be based on ecosystems rather than industries. Compared to the mainstream competitive strategy theories of that time, this idea seemed far ahead both theoretically and operationally.
The arrival of the Internet economy has profoundly changed the business environment, significantly enhancing user power over vendors, with user experience becoming a key winning factor.
In the consumer internet space, the efficiency of information transmission has undergone a dramatic change, allowing people to choose the most suitable products at lower transaction costs. However, on one hand, as competition between platforms becomes increasingly intense, the room for improving user experience is shrinking; on the other hand, the consumer internet is more about the digitalization of marketing, and while there are some explorations of innovative business models, overall, there are gaps in key areas of experiential innovation such as personalized customization and user participation.
This is precisely the new opportunity and trend in the IoT era. In the IoT era, not only marketing must be user-centered, but the entire value chain must also be user-centered. Traditional “back-end” departments such as R&D, manufacturing, and supply chain must come to the forefront, face users directly, and iterate user experiences continuously. Clearly, to achieve this, enterprises must upgrade to platforms, platforms must transform into ecosystems, and create ecological brands.
In May 2018, Haier Group’s Chairman and CEO Zhang Ruimin believed that in the IoT era, the paradigm of brands would inevitably change. He first proposed the concept of “ecological brands” and led Haier Group to officially begin the ecological brand strategy phase in 2019.
Zhang Ruimin summarized ecological brands into two value cycles: “one is the value cycle of user experience iteration, and the other is the value cycle of ecological partners’ value sharing. Once users gain value, all ecological partners can share in that value.” From the perspective of value proposition, it can be summarized as “two advantages”: for users, ecological brands are brands that have a competitive advantage in experience iteration; for ecological partners, the value cycles they participate in have comparative advantages. Under this guiding philosophy, a large number of ecological brands have emerged under Haier Group, including Kaos, Haier Biomedical, Clothing Internet, and Food Internet.
Haier’s ecological brand Food Internet has successfully created a new way to enjoy Beijing’s famous dish—Peking Duck. This dish involves 40 steps from preparing the duck to serving it, which is hard to replicate in a traditional home kitchen. Food Internet started by exploring the production standards of raw duck, collaborating with national banquet chef Zhang Weili and duck farm owners to create a semi-finished product for Peking Duck. After six months of experiments and thousands of trials, they ultimately derived the best taste data. Sales exceeded ten thousand units within two days of launch. Subsequently, Food Internet evolved with ecological partners to launch low-fat, flavored, and sliced versions. As of August this year, over 100,000 families have made Peking Duck at home.
Innovative Economy: Endogenous Innovation and Shared Prosperity
The economic growth achieved by some developed Western countries from the late 19th century to the mid-20th century can largely be attributed to the creativity of ordinary people. Nobel Laureate Edmund Phelps referred to this as “endogenous innovation.” Phelps’s research found that many creative advancements came from ordinary people, including farmers, fishermen, workers, and office employees, who discovered newer and better methods in their work, and sometimes even created new products.
Phelps termed this endogenous innovation-driven economy as the “innovative economy,” believing that “its core lies in a ‘huge space for imagination,’ a space for conceiving, creating, marketing, and even adopting new things, and this innovative activity brings both material and non-material returns.” Among them, material returns are inclusive, enriching many people from enterprises and lifting low-skilled workers out of poverty, while the middle class employed in the economy also became affluent, with significant income increases. Employees contributing to innovation not only receive bonuses and promotions but also gain a sense of extraordinary honor, mission in their work, and a sense of achievement through challenges, self-expression, and personal growth, which are non-material returns.
Phelps believes that his views resonate with the philosophy behind Haier Group’s Human-Unit Integration management innovation, as both assert that to generate sufficient vitality and realize the popularization of endogenous innovation, it is essential to leverage the creativity of “ordinary people” rather than just those with suitable talents. In this model, anyone can compete for positions, and employees are no longer passive executors but entrepreneurs and partners. Haier’s model inspires employees to innovate around user needs, ensuring Haier’s continuous upward vitality, where “everyone can become their own CEO” under the Human-Unit Integration model.
Management guru Gary Hamel also praises Haier’s Human-Unit Integration model and ecological brand strategy, stating that leaders around the world greatly underestimate the power of collective wisdom and self-organization, often taking wrong turns by assigning the responsibility of strategic choices and directions to a few high-level individuals, who “hijack” the organization’s ability to change, relying solely on their personal will to adapt and change—a very poor gamble.
Endogenous innovation, along with ensuring prosperity and vitality through the power of self-organization, has already become a reality in Haier’s ecology.
Ecological brands represent an “innovative economy entity” that first requires individuals to be autonomous, possessing decision-making, personnel, and distribution rights: on one hand, they must be in close contact with users, having keen insights into users’ real experiences and evolution; on the other hand, they must take timely and effective actions, which means innovating and ultimately delivering value—though this is not the end goal. Zhang Ruimin believes that maximizing human value is the ultimate goal, which is eternal.
Haier Biomedical’s general manager Liu Zhanjie, who was once a university professor, started as a technician after joining the Haier platform, and later became an entrepreneur with 67 others under the Human-Unit Integration system, all investing their own money to bet on their success. Although the risks were high, they succeeded and listed on the Science and Technology Innovation Board in October 2019, with a market value increase of 300% in less than two years. Compared to wealth growth, the products they developed may also bring non-material returns. Today, the Hai Le Miao vaccination vehicle developed by Haier Biomedical is serving over 5 million people for COVID-19 vaccinations in nearly 200 cities nationwide.
Ms. Liu Xiao, co-producer and general manager of the Chinese edition of Harvard Business Review, and Ms. Wang Xing, president of Kantar Greater China and global chair of Kantar BrandZ™, jointly released the ecological brand certification system.
Leading Evolution: From Standards to Pathways
Ecological brands represent a completely new brand paradigm. External recognition of it is gradually becoming clearer and continuously evolving. In September 2020, the world’s first “IoT Ecological Brand White Paper” was released, systematically addressing the question of “what it is.” The white paper states, “IoT ecological brands are new brand paradigms that co-create with users and partners, continuously providing boundless and iteratively superior overall value experiences, ultimately achieving lifelong users and win-win coexistence among ecological parties, creating value cycles for society.” Additionally, the white paper clarifies 19 differences across 7 categories between ecological brands and traditional brands from three perspectives: brand ideals, users, and partners, elucidating the standards for ecological brands.
On September 17, 2021, at the fifth Human-Unit Integration Model Leading Forum, Kantar, the Saïd Business School at the University of Oxford, and the Chinese edition of Harvard Business Review globally launched the ecological brand certification system based on case studies and pilot validations of ecological brand practices from enterprises like Haier Group. The assessment model is based on three perspectives: co-evolution (necessary condition), value circulation (sufficient condition), and brand ideals (inevitable mission), encompassing five core dimensions—user experience interaction, open collaborative co-creation, lifelong user value, win-win value-added utility, and social value contribution. For instance, the ideal of Haier’s ecological brand is to maximize human value while maximizing the values of users, ecological partners, and employees, contributing to the overall value of society.
The certifying body employs quantitative audience research, expert case reviews, and key data reviews to ultimately generate an ecological brand potential map, categorizing brand evolution into three stages:
Climbers:Willing to transform into ecological brands, already taking action;
Competitors:Breakthroughs in ecological brand transformation, with relatively rapid progress;
Pioneers:Achievements in ecological brand construction, serving as leaders.
At this point, the ecological brand paradigm has the conditions for comprehensive replication, encompassing not only “why” and “what” but also providing pathways for evolution, addressing the “how to do it” question. Certification helps enterprises understand their current stage.
Every enterprise must fully recognize that, as Zhang Ruimin repeatedly warns, “There are no successful enterprises, only enterprises of the times.” He also states, “Often, success is the mother of failure,” and only by changing their mindset, self-overcoming, and embracing the grand trend of the IoT era can they become part of the new brand paradigm and avoid being disrupted.
Zhang Ruimin often says, “As long as you find the right path, you need not fear the distance.” Building ecological brands is undoubtedly challenging. Every enterprise aiming to build ecological brands must see the lighthouse ahead, recognize their current stage, and then adopt practical strategies and persistently work towards reaching the shores of ecological brands in the IoT era.
Deng Zhonghua | Text
Deng Zhonghua is a contributing writer for the Chinese edition of Harvard Business Review and a partner at Qingge Studio.
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