Prof.Dr.

Aung Tun Thet

7/29/2020 Based on “How Autonomy Creates Resilience in the
Face of Crisis”, Howard Yu and Mark J. Greeven,
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MIT SMR, March 23, 2020
 • Exposed fragility of global supply
chain and companies’ organizational
structures
• More efficient, bear fewer costs, and
eliminate redundancies, organizations
rely on tightly coupled, interdependent
systems

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 • Little slack and few buffers among
parts
• Little room to maneuver when something
goes seriously awry
• Dependencies span vast geographic
distances
• Especially vulnerable to delays in
another part of chain
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AUTO INDUSTRY

• Manufacturers — from Toyota in Japan to General

Motors in U.S. — rely on parts from China
• Industrywide emphasis on just-in-time delivery mean
don’t carry much safety stock

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AUTO INDUSTRY

• In normal circumstances system efficient and

productive
• No one can build a car with only 99% of its parts

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AUTO INDUSTRY

• Hyundai closed assembly plants in South Korea

• No Chinese parts

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AUTO INDUSTRY

• Channels efficient in periods of calm

• Now source of severe disruption

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ORGANIZATIONAL RIGIDNESS

• Exacerbated supply chain issues across sectors -

Apple, Toyota, and Hasbro
• Impact not universal

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HAIER GROUP

• One of world’s biggest home appliance

manufacturers
• Operating at full capacity again
• Distinctive organizational design

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HAIER GROUP

• Organized itself not as ‘top-down’ pyramid

• ‘Swarm’ of self-managing business units
• Make own rapid adjustments to stay afloat in times
of crisis

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HAIER CEO ZHANG RUIMIN

• Obsessed with breaking bureaucracy

• “Successful companies move with the times”
• Around 2012 issued midlevel managers ultimatum
• Be fired or become independent entrepreneurs

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HAIER CEO ZHANG RUIMIN

• Transform company from few monolithic businesses

into 4,000 microenterprises (MEs)
• Comprising just 10 to 15 employees
• Reduced workforce by around 45%
• Created new positions for more than 1.6 million

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HAIER CEO ZHANG RUIMIN

• Increase in autonomy
• Gave leaders of each ME decision-making powers
— hire staff or control distribution
• MEs independently transacted with one another
• Given full autonomy to deliver final product to
consumers
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HAIER

• Certain MEs manufacture specific component parts

• Others provide services like HR or design
• Introduced internal platforms to facilitate
transactions among Mes
• Enabled coordination but did not direct it

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HAIER

• MEs buoyed business

• Freedom to adjust own supply chains according to
specialized knowledge and up-to-date information

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HAIER

• MEs shifted dependencies

• Each ME act rapidly to reduce disruption
• Recover more quickly than competitors

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HAIER

• Fulfilled 99.8% of orders throughout February 2020

• 60% of products manufactured in factories outside of
China

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COMPANIES

• Crisis-proof
• 4 strategies

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1. DEMOCRATIZE DECISION-MAKING PROCESS

• Allow cross-functional teams more decision-making

powers
• “Flying SWAT teams”
• Limited requirements to report back up hierarchy

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1. DEMOCRATIZE DECISION-MAKING PROCESS

• Increasing autonomy scary

• Employees on the ground asset for making tough
calls
• Trust teams’ capabilities and skills

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2. EMBRACE SINGLE-THREADED LEADERSHIP

• Single-threaded leadership well known for success in

tech giants such as Amazon
• Giving leader single problem to solve with specific
budget and timeline

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2. EMBRACE SINGLE-THREADED LEADERSHIP

• Taking cue from venture capital world

• Companies identify startup idea with potential
• Handing it to one leader to bring it to life

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2. EMBRACE SINGLE-THREADED LEADERSHIP

• Clearly defined role

• Leaders maximize focus and minimize distractions

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3. COMMUNICATE CLEARLY AND TRANSPARENTLY

• Leaders make use of digital workflows and start

recording who decides what and why
• Record business meetings on video
• Make them available to everyone via simple internal
communications platform

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3. COMMUNICATE CLEARLY AND TRANSPARENTLY

• Transparency into key information employees need

• Increasing trust
• Clarity around decision-making (and responsibilities
and accountability) at the top
• Lowering communication costs

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4. PRIORITIZE DIGITAL COLLABORATION TOOLS

• Internal communication hindered by legacy systems

and situations: waiting for decision in “next week’s
meeting”
• Select one set of digital collaboration tools
• Go all-in

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4. PRIORITIZE DIGITAL COLLABORATION TOOLS

• Tools easily installed and used for virtual meetings,

instant communication, and project work
collaboration: Zoom, Skype or Slack
• Ease of use
• No more than 48 hours to implement

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 • Warren Buffett: “Only when the tide
goes out do you find out who is not
wearing a bathing suit.”
• Exposed fallacy of singular pursuit of
efficiency
• Opportunity and impetus to end
corporate bureaucracy!

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