**Translator's Note**: The following translation is an attempt to convey the original text's meaning in English while maintaining the essence of the message.

Some terms and phrases may not have direct equivalents in English, and thus have been adapted to fit the context.

--- **Preface**: On September 20, 2024, marking the 19th anniversary of the establishment of the RenDanHeYi (Rendanheyi) model, the 8th RenDanHeYi Model Leadership Forum, co-hosted by Haier Model Research Institute (HMI), Gary Hamel Management Lab (MLab), and Business Ecosystem Alliance (BEA¹), was held as scheduled.

Management scholars, consultants, corporate and non-profit organization leaders from over a dozen countries around the globe gathered in Qingdao to jointly explore the new economic engine of the artificial intelligence era.

For the first time, the forum introduced the "Zero Distance Excellence (ZeroDX)" list, whose theoretical model was developed based on the "Zero Distance" proposition and philosophy of Haier's founder and Honorary Chairman of the Board, Zhang Ruimin.

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The list's criteria and scales were jointly developed by HMI, MLab, and BEA, aiming to discover and explore innovative enterprises, organizations, and pioneering individuals in the zero-distance organizational model.

This year's inaugural list includes 70 enterprises and non-profit organizations from six continents and 26 countries.

Forum hosts Gary Hamel and Stuart Crainer² invited Zhang Ruimin to personally elucidate the "Zero Distance" concept and the "Zero Distance Excellence" list.

In his speech, Zhang Ruimin attributed the inspiration for "Zero Distance" to management guru Peter Drucker.

Drucker wrote in his 1999 book "Management Challenges for the 21st Century," "The internet eliminates distance, which is its greatest impact."

In 2000, Drucker made a prophecy, "As far as we know, companies will not survive in the next 25 years, legally and financially they might, but structurally and economically they cannot."

The former is a conclusive judgment, while the latter is a trend forecast caused by the former.

These two sentences have been floating in the historical sky for over 20 years, and they are rarely cited, with even fewer practitioners.

Zhang Ruimin often cites them, partly because of his extensive reading, and on the other hand, it can be explained by "I annotate the Six Classics" and "The Six Classics annotate me."

In practice, Haier has integrated the "Zero Distance" concept into its own transformation and innovation, pioneering the RenDanHeYi model that subverts the classic management model, and guided by the RenDanHeYi model, it has broken down the "walls" between departments within the organization, thereby breaking organizational boundaries and developing into an open business ecosystem.

Haier's leading practice has provided an excellent footnote for Drucker's management thoughts and has also provided an operable, replicable, and continuously feedback-optimized new paradigm for enterprises and organizations around the world who are troubled by bureaucracy.

As a thinker, Drucker's greatest contribution to the development of modern management should perhaps be his other discovery, "Management is a practice, its essence is not in knowledge, but in action, its verification is not in logic, but in results."

Practice makes perfect, in this sense, Drucker and Zhang Ruimin have demonstrated another kind of "Zero Distance."

It has been exactly 19 years since the RenDanHeYi was proposed.

Just now, Zhou Yunjie has made a very comprehensive keynote speech, and I mainly talk about the concept of "Zero Distance Excellence."

The Zero Distance Excellence Award was just established, and this year is the first edition, but there are already many enterprises from all over the world applying for it.

The whole process is hosted and promoted by Zhou Yunjie, which also shows that our unique ecological inheritance model is very advantageous.

Yesterday morning, I had a discussion with several representatives who won the Zero Distance Excellence Award.

Their innovative spirit of combining RenDanHeYi with different local cultures deeply moved me.

Dr. Annika Steiber from the RenDanHeYi (Silicon Valley) Research Center and Rick Fernandez, Chairman of the ISO/TC 279 Innovation Management System U.S. Technical Advisory Group, introduced the RenDanHeYi model into the ISO56001 innovation management system, becoming an international standard.

There is also a young man from Uganda who, instead of being an accountant, created a water purification system for a refugee camp in Uganda.

This may not seem much to us, but it is really remarkable locally.

From entering the ISO56001 international standard to entering non-profit organizations in Africa to seek benefits for people, it shows that RenDanHeYi has entered all aspects of the world and has become a universal model.

Therefore, I would like to express my heartfelt thanks to all the organizations and individuals who have won the Zero Distance Excellence Award.

Thank you!

Next, I will explain the concept of "Zero Distance Excellence."

The three characteristics of "Zero Distance" let's first look at zero distance.

I personally think the meaning of "Zero Distance" can be summarized into three points: the timeliness of zero distance, the challenge of zero distance, and the urgency of zero distance.

1.

The timeliness of "Zero Distance": The timeliness of "Zero Distance" is reflected in its relationship with the internet.

Without the internet, there would be no zero distance.

Who first proposed "Zero Distance"?

I think it was the management master Drucker.

More than 20 years ago, at the age of 90, he had already understood the essence of the internet.

He mentioned in his book "Management Challenges for the 21st Century," "The internet eliminates distance, which is its greatest impact."

In the literature I have seen, Drucker was the first to propose this concept.

Of course, today we can all see very clearly, for example, without the internet, there would be no "zero distance" online shopping in e-commerce today.

2.

The challenge of "Zero Distance": Zero distance is both an opportunity and a challenge for us, and its challenge lies in destroying the classic management model.

Why?

Because the classic management models are all "distanced," and the basis for many of its management principles is also "distanced": traditional enterprises are too far away from users, not only without interaction, but even without transactions, because traditional enterprises do more to sell products to distributors rather than users.

The most important thing about zero distance is to be zero distance from users.

Drucker proposed "Zero Distance" in 1999, and we also started exploring "Zero Distance" that year.

The first step was to be zero distance from users.

Through zero distance from users, from mass manufacturing to mass customization, this brought about the second "zero," which is zero inventory of products, and then these two "zeros" forced the functional departments to force out the third "zero," which is zero signatures, without the need for functional departments to command, let everyone can be self-innovative.

On this basis, on September 20, 2005, we proposed RenDanHeYi.

From this perspective, zero distance is a system that involves all aspects of zero distance.

Its essence is to evolve from a zero-distance system into an ecological structure, an ecological organization.

3.

The urgency of "Zero Distance": How urgent is it?

It is urgent to change today, without delay.

Drucker predicted in 2000, "As far as we know, companies will not survive in the next 25 years, legally and financially they might, but structurally and economically they cannot."

This sentence enlightens us that if you do not change, you will become a company that exists in name only in the era of the Internet of Things.

"Exists in name," as Drucker said, legally and financially it still exists - legally it is legally registered; financially it can publish financial statements, carry out financial accounting, there is no problem, although it still "exists in name," but like a walking corpse.

"Really dead," as Drucker said, "structurally and economically it cannot" - structurally, if your organizational structure is still hierarchical rather than self-organizing, then it will inevitably be abandoned by the era of the Internet of Things; economically, if it is still a product economy rather than an ecological economy, then it will definitely be abandoned by the Internet of Things.

Drucker predicted 25 years later, which is next year, in fact, we don't have to wait until next year, now we have already seen a large number of companies that have not changed are already struggling to survive, some have already begun to go bankrupt.

Therefore, companies must either evolve into an ecosystem or exist in name only.

We just talked about the three characteristics of "Zero Distance."

What does zero distance mean?

It means that within our organization, it is zero distance, which means that there is no distance of subordination between us.

There is no "you are my superior," "you are my competent department," "you are my functional department" and these relationships, we are zero distance.

We are just partners, and this is the goal that zero distance wants to achieve.

"Zero Distance Excellence" has three "excellences": the first is the excellence of autonomous individuals, the second is the excellence of self-organization, and the third is the excellence of self-evolution.

1.

Excellence of autonomous individuals: Each person is zero distance from their own dignity.

I personally think that autonomous individuals are those who can be their own masters.

To put it bluntly, my innovation is up to me.

To make a popular analogy, autonomous individuals are like an eagle, which can soar freely and hunt freely, and can freely decide their own actions.

What is a non-autonomous person?

It is a person under the hierarchical system, and they are like a kite, and this kite is not tied with just one string, but many strings.

Just like under the hierarchical system, you don't just have one superior, all functional departments can control you, you may receive instructions from various aspects, so this kite can neither fly high nor be pulled by various forces.

We have created an atmosphere for autonomous individuals.

Haier has removed the middle management department and 12,000 middle management personnel in the middle management department, allowing everyone to become a maker.

With this environment, everyone can create their own value autonomously.

The goal of autonomous individual excellence: Each person is zero distance from their own dignity.

Why can I be zero distance from my own dignity?

Because dignity is reflected by value, and these values are created by my own innovation, not by being forced to execute.

Kant said in "Practical Anthropology," "Man has a characteristic of creating himself," that is, everyone can create their own goals, as long as they are given an atmosphere of autonomous individuals, they can set their own goals, design their own paths, and achieve their own goals, which is the maximization of human value.

Professor Gary Hamel's exposition in "Human-Centered Governance" I think is very high.

His definition of human-centered governance is "a new value and law centered on people... releasing the human spirit."

This is a new value, not an old value, the difference lies in the autonomous individual creating value.

The purpose of doing this is to release the human spirit, not only at a higher level, but also broader, hoping that all of humanity will release their own spirit, create their own value, and achieve their own dignity.Autonomy and Excellence: Ensuring that every individual has their own dignity and creates their own value.

II.

Self-Organizational Excellence: Zero Distance from the Fourth Industrial Revolution Self-organization is an organization composed of autonomous individuals.

Without autonomous individuals, there is no self-organization.

We start by developing autonomous individuals into micro self-organized units, each with no more than 10 people, and then evolve these micro units into self-organized chains (ecosystem micro group chains).

The goal of self-organizational excellence is to be at zero distance from the Fourth Industrial Revolution.

We are already in the Fourth Industrial Revolution, but many enterprises cannot integrate into it because it demands ecological organizations, which bureaucratic organizations cannot integrate into.

The Chairman of the World Economic Forum, Klaus Schwab, in his book "The Fourth Industrial Revolution," proposed that the Fourth Industrial Revolution is about bringing all industries and products together without distance.

Once integrated, the positioning of enterprises undergoes a fundamental change; they can only be a node on the internet, not an isolated enterprise.

If your organization is still an isolated enterprise or a bureaucratic one, it cannot integrate into the Fourth Industrial Revolution.

For example, if a person needs a product, they can find it on the internet, but if they need a smart home, no isolated enterprise can provide it alone because an isolated enterprise can only provide a certain type of product, but it cannot combine to create a smart home.

Therefore, integration is necessary.

The Fourth Industrial Revolution has integrated all industries and products.

If an enterprise does not integrate into an ecological organization, how can it adapt?

To create a sense of crisis, Haier proposed two phrases: "Products will be replaced by scenarios, and industries will be 'covered' by ecosystems."

Both phrases start with the word "industry," indicating that products and industries are isolated.

If an organization is limited to a single product or industry, it cannot survive.

In other words, if you still focus only on products and not on creating scenarios, there is no way forward; if you are satisfied with being the leader in an industry and want to be more prominent, rather than turning the industry into an ecosystem, there is no way forward.

Autonomous individuals form self-organizations, and self-organizations must align with the "integration" of the Fourth Industrial Revolution.

III.

Self-Evolutionary Excellence: Evolving to "Zero Boundaries" and Creating a New Engine for the Internet of Things Era My personal view is that an organization that can self-evolve must be an ecosystem; if it cannot self-evolve, it is not an ecosystem.

For example, the Amazon rainforest is self-evolving; it is an ecosystem and can sustain an infinite virtuous cycle.

A traditional enterprise cannot self-evolve; it is not an ecosystem.

It cannot self-evolve; it can only grow, and that too in a closed space.

The result is clear: the lifespan of enterprises is getting shorter, and it may become increasingly difficult in the Internet of Things era.

Evolution is endless.

Haier's self-evolution has evolved from the 1.0 version of "zero distance" to the 2.0 version of "zero boundaries," which is still just a phased goal in the process of evolution.

The goal of self-evolutionary excellence is to evolve to "zero boundaries" and create a new engine for the Internet of Things era.

The engine of the internet era is the search engine, with 80% of the market share in Google's hands.

The Internet of Things has not yet "caught fire" because it lacks a new engine for the Internet of Things era.

Can we just take the search engine directly?

No.

Because the search engine only facilitates the purchase of goods, while the engine of the Internet of Things needs to support not the purchase of goods but the co-creation of scenarios.

For example, a smart home requires all related industries to integrate, but if an industry is still bureaucratic, they cannot integrate to meet the needs of the smart home scenario.

For this, we have explored on our own—the new engine of the Sanybird Smart Home, the new engine of the Kaos Ecosystem Economy, the new engine of the Kaitach Auto Ecosystem, and the new engine of the Yingkang Lifelong Health Ecosystem.

Zhou Yunjie has already explained in detail, so I will not elaborate.

What I want to say is that new explorations must be arduous because in an ecological organization, no one can command all stakeholders; we should let the participants become an ecosystem willing to innovate, where everyone can reflect their own value.

Can the new engine succeed?

There are many determining factors, and I believe the most important factor is to create an ecosystem, an intelligent interactive ecosystem, which is both co-creative and intelligent, and can continue to interact.

Evolving to an intelligent interactive ecosystem is very important for the environment.

The first law of artificial intelligence states, "Intelligence can only evolve, from simple to complex, and cannot be designed; the environment for evolution is very important."

What is said here "cannot be designed" does not mean that design is not needed, but emphasizes that if there is design without an evolutionary environment, the design cannot yield results.

For example, Germany has very strong AI design capabilities, ranking among the best in the world, but their conversion rate is only 15%, while the United States' conversion rate is 50%.

Therefore, our four new engines, and more new engines, their path to success must be based on building an intelligent interactive ecosystem environment.

Although it is very difficult, we must continue to explore and persist in the process of exploration.

This is like the famous quote by Mr. Stuart Crainer in "The 100-Year Management," "There is no final answer in management, only eternal questioning."

The difference is that what we are questioning now is not a product, not a specific job, but an ecosystem.

That is to say, what we are eternally questioning is not a static result, but a dynamic ecosystem.

Let others talk, let's follow the times!

Since what we are eternally pursuing is a dynamic system, it leads to the conclusion of my speech today: "The governance of a gentleman begins with what is not visible and ends with what is unattainable."

This sentence by Liu Xiang from the Western Han Dynasty in China has been more than 2000 years ago.

In today's context, it means that your governance is not favored at the beginning, and everyone is not optimistic, but in the end, it has become a direction that others recognize and attract everyone to go in this direction, but it may already be "unattainable."

This realm is definitely not a single product because products are easy to imitate, but once a dynamic system is truly implemented, it is very difficult for others to learn.

Haier proposed more than 30 years ago when we were doing the brand, we want to create an international brand instead of OEM for international brands, to create a brand instead of OEM.

For this, we have indeed suffered a lot of pressure in finance, not only because the products are difficult to make a profit, but also because they need to invest a lot of money in the markets of various countries.

We were the first Chinese home appliance company to set up a factory in the United States, and at that time, the public opinion was mostly opposed.

They thought that American companies have set up factories in China, why should Haier set up a factory in the United States?

It must be a loss rather than a profit.

The result is that we have gained experience in setting up factories overseas.

Now many companies also want to go abroad to create a brand, to set up factories abroad, and we are already in a leading position.

But "unattainable" is not only these, but also through creating a brand abroad, setting up factories abroad, we have mastered the operation rules of the foreign market, understood the mentality of foreign consumers, and more importantly, understood the foreign culture.

These experiences have laid the foundation for our cross-border mergers and acquisitions.

After we acquired international home appliance brands such as General Electric in the United States, Candy in Italy, Fisher & Paykel in New Zealand, and Sanyo in Japan, they are all developing very well now.

The premise of developing well is that we have not sent a manager from the headquarters, they are still the original people, but they have accepted the person and order integration.

It is the integration of people and orders that has made a big change in them.

The highest failure rate in international mergers and acquisitions is the non-integration of culture, and we can achieve cultural integration, which is because we understand the foreign market.

Moreover, the integration of people and orders reflects the concept that everyone can accept - that is, to let everyone reflect their own value, let everyone have dignity, which is acceptable regardless of nationality, country, and region.

This is not only at the management level, but also at the level of human nature.

In the international mergers and acquisitions, it is rare to see such a precedent of not sending personnel but achieving cultural integration and good results.

This should be the realm of "unattainable."

Such a system can be said to be "unattainable," but it still faces new challenges.

The new challenge is whether we can also make the new engine of the intelligent interactive ecosystem.

This requires us to calm down, regardless of what others say, we must calm down, and resolutely explore.

Therefore, we can get inspiration from Dante's "Divine Comedy·Purgatory" "Follow me, let others talk."

He said "Follow me, let others talk," we should now change the "me" in this sentence to "the times."

Let us follow the times together and let others talk!