Identify Defects by Shining a Light on Them

In a recent Fortune Magazine article, Geoff Colvin shares his recent experience with Zhang Ruimin, a Chinese executive, CEO of Qingdao Refrigerator Factory and Haier Group. Zhang Ruimin leads an enterprise company with over $20 Billion in revenue. Perhaps it’s the biggest company we’ve never heard.

When Zhang Ruimin first became CEO, he demonstrated the principle of Disclosing all Mistakes as Taiichi Ohno used to say so that we can learn from mistakes.

When he first became CEO in 1984, he quickly realized that Qingdao was producing defective refrigerators. So,

he had 76 defective [refrigerators] pulled from the rest, gave the staff sledghammers, and ordered them to destroy every one. The message: poor quality is no longer tolerated.

This dramatic move is admirable. To further support this example, he put in place a program by which errors made by an employee were published and that employee would have to explain to his team what the error was and why it happened.

Another change Ruimin made was customer feedback. After noticing that sales of his company’s were poor in Sichuan province, he discovered the reason was that villagers were using the machines to wash sweet potatoes, clogging the drains in the washers. In response, Zhang had his company redesign the product to wash produce in addition to clothing.

Shine a light on defects. Listen to your customers. Those are wise words to run a company by.