The Link between Sea and Water

In his speech, Zhang Ruimin described the salient character of sea as follows: ‘[it] gives birth but does not have ownership; [it] helps and does not appropriate them’ (in Chinese, 生而不有, 为而不恃)” (Lin, Reference Lin1948). This statement comes from the Tao Te Ching (Chapter 51), the quintessential text of Taoism, which is at the core of Chinese philosophical tradition. Inspired by this insight, we seek to explore the underlying theme of the speech by framing the metaphor of sea as rooted in the symbolism of water in Taoism.

Zhang also used many other metaphors related to water, which is the central symbol in Taoism, and the four key features of sea are all rooted in the four general characteristics of water.

First, sea, as a large body of water, is composed of water.^[ Footnote ^{1 ]} Taoism often praises sea in terms of its broad scope to embrace diversity.

Second, Taoism believes that ‘the highest good is like water’ (in Chinese, 上善若水) because ‘water benefits everything by giving without taking or contending’ (in Chinese, 水善利万物而不争) (Waley, Reference Waley2013). As noted in the Tao Te Ching, only being selfless can lead to self-realization.^[ Footnote ^{2 ]} Further, as it combines, water is a symbol of overcoming difficulties.

Third, given these two characteristics of water, Taoism believes that water is self-purifying – that is, it can continuously transform and transcend its former self to become better over time because it has the rare ability to clean itself as well as other things. It can also be argued that this ability is made possible by the features of diversity in unity and selfless contribution.

Fourth, relatedly, the perspective that ‘the highest good is like water’ contains another dimension as the most central to Taoism – that is, the theme of ‘active inaction’.^[ Footnote ^{3 ]} (in Chinese, 无为无不为). Taoism argues that water is the softest of all substances ‘because it prefers what does not lead to strife and therefore does not go amiss’ (in Chinese, 夫唯不争, 故无尤), but water is also a symbol of enormous power in inaction, thus it is the most active in the superficial form of inaction. The best example of water's ‘soft power’ is a drop of water: even though it seems to be the softest and weakest, ‘constantly dripping water can wear away a stone’.

The Implications of Sea for Strategic Patterns and Employee Behavior

Based on these features of sea and characteristics of water in Taoism, the letter ‘Haier Is a Sea’ has influenced Haier's strategic patterns and employee behavior in various ways. First, the letter suggested the goal and promotion of product diversification beginning in the early 1990s. If we regard different Haier products as different sources of water, the firm was always ready to diversify its sources of water by embracing all the rivers, large and small, far and near, that came all the way into sea. If some of the rivers were dry, Haier as a sea could still receive inflows from other rivers, thus it was ‘externally inexhaustible’. Second, the letter suggested Haier's implementation of its diversification strategy through mergers and acquisitions (M&As). If we consider different companies as different rivers, Haier as a sea could merge water flowing from different rivers, thus acquiring other companies.

Third, the letter showed Zhang's international mind-set and Haier's internationalization strategy in the mid-1990s. If we regard Haier's different national markets as different sources of water, Haier as a sea accepted inflows from different markets in the world. The internationalization of Haier reflected the spirit of the firm as a sea absorbing various sources of global revenues (Liu & Li, Reference Liu and Li2002). Fourth, these examples of Haier's broad mind-set are also related to the capacity for self-purification in the sense that various types of diversification enabled continuous renewal of Haier's business models as well as its organizational restructuring over the years.

The letter ‘Haier Is a Sea’ also influenced the employee behaviors at Haier. First, this letter called for embracing a wide spectrum of diverse human resources in the form of its employees. Haier's broad mind-set as a sea implies its inclusion and integration of talents from different places. Second, the letter encouraged employees to work as a unified team or groups to achieve the firm's ambitious goals. Although individually employees might be like single drops of water, if they work together, the power of Haier as a sea will be overwhelming.

Third, the letter inspired Haier's employees to make a commitment to contributing to society (Yi & Ye, 2003), just as the water in sea contributes to Mother Nature. Fourth, the letter also called for the ability to unlearn (suspecting, suspending, and surrendering existing routines) as the most critical antecedent to effective exploratory learning. In this sense, the capabilities for unlearning and exploratory learning may be the two core dimensions of self-purification. This particular capacity can enable employees to actively engage in the continuous renewal of their skills and routines, especially for path-breaking innovation.

The four features of sea and the four characteristics of water can be reframed as the basic dimensions of a novel form of absorptive capacity, above and beyond the narrow focus on the technical domain (cf. Cohen & Levinthal, Reference Cohen and Levinthal1990; Lewin, Massini, & Peeters, Reference Lewin, Massini and Peeters2011). Further, the capacity for self-purification is closely related to dynamic capability (Teece, Reference Teece2007).