Abstract: The idea on the transformation is from the process of Haier's case study. According to analog analysis on innovation experience between Haier and Tsinghua Tongfang, a big problem on innovation management of Haier was found. Based on literature and case studies, this paper analyzed the problem within innovation practice background in China, and then came a conclusion, i.e. there must be a transformation from traditional function integration to innovation synergy to acquire balance in short-term competitive profit and long-run competence development, value adding and creation, market innovation and technological innovation.

Key words: total innovation management, function integration, innovation synergy