High-OQ leaders stage moments of theater that will be told and retold throughout the organization. Do you see that Huawei is a pawn in the broader US-China trade war that's going on at the moment? I had a vague feeling at the time though, that the communications industry was about to explode and so I started looking for opportunities in this market with tremendous potential. We will expand it, and dive deeper into it. For that reason, phase 3 focused on simplifying management and creating conditions that more creative chaos could be brought back into the structured management models. As he spent decades building one of the biggest tech companies on the planet, Ren Zhengfei kept a low public profile. But the US is in a different situation. Copyright 2023 Harvard Business School Publishing. We have limited resources and technologies. For example, as the products of Huawei in their pioneering years were not yet well developed he visited many R&D offices abroad. Arjun Kharpal: Mr. Ren, you've said in the past that the US government hasn't seen Huawei's technology and source code. All references must be sourced to a "CNBC Interview'. She's, of course, facing extradition to the U.S. How did you feel after her arrest in December? There is nothing else that I want to share with him. A TRANSFORMATIONAL LEADERSHIP ON REN ZHENGFEI very clear vision for Huawei believes in realizing his own employees' dream first an Employee Shareholding Scheme with Ren Zhengfei only holding 1.4% Employees express their views and share knowledge on Xinsheng Community 2018,ren zhengfei published a document criticizing the company's leaders for mismanagement and fined himself 1 million yuan I couldn't really get what the market economy was about, so I ended up making a mistake while working for a state-owned company which got me let go. So this won't impact us too much. As a leader he was used to delivering a vision and as a mentor he was guiding his employees towards their goal. Our relationship with the Chinese government is primarily defined by these two points. Indeed, as the Chinese say: Every generation produces its own great character (Jiang shan dai you ren cai chu) and each exerts impact for hundreds of years (Ge ling feng sao shu bai nian). Smartphone was badly hit. You often use military imagery and images of battles in your speeches and communications with the employees at the company. Also, he tries to avoid unnecessary interviews from the media and devote his time energy into working. Back then, it would reach minus 20-something degrees Celsius in the winter. Obviously this has required a strict control of information, which attaches a flavor of secrecy and even mystery to the behavior of Mr. Ren Zhengfei. They had thought that disbanding was to weed out unnecessary troops and strengthen the remaining units. The company is growing rapidly and Forbes has estimated Zhengfei's wealth at $2.1 billion. He is recognized as a leader who motivates to facilitate innovation at all levels. This category only includes cookies that ensures basic functionalities and security features of the website. Arjun Kharpal: Mr. Ren, we spoke about Apple and Steve Jobs. His tax cuts are helping revitalize enterprises. Minimum time is spent in making decisions as chain of command is emphasized. They don't need a warship to conquer the world. As a leader, Ren Zhengfei insists on self-criticism and careful consideration. For example, In the UK, Huawei has put much effort into convincing the British government and general public that they and their procedures can be trusted, by (a) Setting up the Cyber Security Evaluation Centre in Banbury to ensure the quality of their equipment, and (b) Cooperating with the GCHQ, the UKs signals-intelligence agency, to ensure that the, The European Business Review uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. He is continuously focused on the future and hardly ever ruminates about the past. We just provide the equipment used to build these networks. So he emphasized action. Arjun Kharpal: Have you spoken to her recently? In the first decade of the developing of the company, Huawei is needy for all kinds of human resources. Therefore, Zhengfei acted more like a catfish in the high-level decision-making process, who has constantly created imbalance to inspire passion across the organisation. But he also has shortcomings. Or do you feel sometimes they are intimidated by that style of leadership? Mr. Ren: I think my children have grown up without experiencing much hardship. If the US opens its telecom industry and its operators say they are going to purchase tens of billions of dollars in equipment from us, I wouldn't believe it and wouldn't be willing to make billions of investments. Later, that company stopped working with us. Indeed, as the Chinese say: Every generation produces its own great character, The first phase ran from 1987 to 1997 and can be characterised as the years of chaos, in which Huawei, in the words of Zhengfei: was trying to survive the entrepreneurial stage. Academics were reluctant to engage with executives. Today, only 30 years later, ultra-broadband has become accessible in most rural areas around the world. We should not worry that it will hinder social progress. Given these achievements combined with a certain myth of a Chinese emperor rising to the global stage, it begs the question what the philosophy and driving force behind this business success is. Struggling a bit can be good for them. Because they are simple and easy to understand. At that time, China was just beginning with its reform and open-up policy, and was paying more attention to technology, talent, and knowledge. Part of making the dreams of customers to come alive is the idea that providing the best service possible is crucial to the success of the company. Twenty or thirty years from now, outstanding talent may be able to combine genes with electronics technology to create new "people". Do these seven lessons primarily make Zhengfei a cerebral type of leader as the power of the mind is placed so central to his philosophy? This is how, John Sutherland on Leadership and Teamwork, Pro-active Leadership: How to overcome procrastination and be a bold decision-maker, ChatGPT and Its Impact on Author Transparency in Scientific and Academic Journals, How New Age Entrepreneurs are Changing the Way We Think About Business, Layoffs in Tech: Redistribution of Resources Amid a Tech Transformation. Huawei is to a large extent no stranger to this system. After I was discharged from the army, I ran into a big trouble at work. People will be afraid of getting trapped there. He also. Back then, we couldn't use testing instruments from foreign countries. I said I couldn't even imagine what it would look in two or three years. The criticism was scathing, including from McKinsey and other top consulting firms. Strong leaders usually have strong views about how things should be done, which can lead them to take on too many fights too early in their careers. Harshal Pawar High-OQ leaders send messages that reinforce the strategy and minimize other messaging. This case focuses on the distinctive "paternalistic" leadership and management style of Ren Zhengfei, founder of Huawei Technologies Co., Ltd. (hereinafter "Huawei") and considers whether. If we didn't abide by those laws and regulations, we wouldn't survive even a day. We can give you a copy if you want. He has maintained the company as private and his management style has been extremely . Over the past century, which countries and companies have made the US scared? The US hasn't been scared of anyone or anything though. 5G made progress. The US government is actually advertising for us in a good way. The last thing we want is to have bureaucrats or managers lead our way in technology. But our strategy of focused investment never changed as our capital grew. The simpler and clearer, the better; organizational members at all levels suffer from information overload, so leaders need to be selective about what messages to send. Learn how to create a winning business plan. The factory's equipment was from France, and at the time, it was some of the world's most advanced equipment with a high level of automated controls. Saying that he was great is an understatement. Ren Zhengfei, founder and CEO of Huawei, speaking at the company's headquarters in Shenzhen on May 24, 2019. This helps the US greatly improve their national reserve. He is frequently quoted as saying that the most important thing to value is the power to think. Thirdly, its his sense of management that helps him to become an excellent leader. Germany proposed the establishment of a unified global convention that would bar all equipment vendors from installing backdoors, and require them to sign a no-spy agreement. True to this Chinese saying, Zhengfei has indeed proven that he had the influence and insights needed to design the most effective strategies to ensure that Huawei has grown into a world leading company across three phases, each lasting about a decade. I can share some numbers with you. He took. For more information, visit www.cnbc.com. Western companies are no different. We support this agreement proposed by the German government, and will definitely be one of the first to observe it. Instead of issuing an EQ response to mollify the professor, George sent an OQ response: We all work for RSM.. Investor and consumer confidence will increase, and the US economy may take a turn for the better. They are out of the ordinary and unexpected. The story goes that Zhengfei was so moved by the work done in those labs that he cried. First, we want to provide the best connectivity in the world, and 5G is part of connectivity. Neither side has mentioned Huawei, which means Huawei does not actually carry much weight. In Europe, we will face some difficulties in the short term, but there will be no impact on our business. Right now, the support of the Chinese government may not necessarily help our sales, but when the US government criticizes us, it tells the world how great Huawei is. Since China has become the second largest economy in the world, this relationship has taken new forms in the shape of several business initiatives. Everything is limited. I think he was super great. Access more than 40 courses trusted by Fortune 500 companies. Fostering an ethos requires taking two important steps. We invest heavily in our focus area. If you'd like to share this PDF, you can purchase copyright permissions by increasing the quantity. However, it kills employees creativity and . If we didn't pay taxes or follow the laws and regulations in the over 170 countries where we operate, we wouldn't have survived in those countries. Leading Huawei: Seven Leadership Lessons of Ren Zhengfei, The relationship between China and the European continent carries much history with it. The country wanted to reform and open its doors. This is fundamental to solving problems. It often makes sense to adopt a stealth strategy rather than a formally declared one and to bring people along gradually, as it starts to prove itself. So our products needed to be standardized. Don't worry that Huawei would end up having no successor. To stay one step ahead of your competition, sign up today to our exclusive newsletters to receive exciting insights and vital know-how that you can apply today to drastically accelerate your performance. For example, in the early years of Huawei (Phase 1), he regularly told stories to employees that he believed that in 20 years Huawei would have 1/3 of the market share in the world, despite the fact that at that time Huawei only employed about 200 employees. But there are still more than 180,000 employees working at Huawei. That requires two skills. Mr. Ren: Collaboration and shared success. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. . It will never happen. Mr. Ren: I don't know. Turning to personnel, George replaced the people likely to generate the most opposition and appointed a new, supportive vice dean from among the existing department chairs. You're seen as a visionary very much here in China in the technology world. Otherwise, we wouldn't be able to enter the network equipment industry. I don't know what the government officials have said, what concessions they have made, or what opportunities or benefits they've received. You've obviously not been present in that market for a while, Huawei has been in a lawsuit over there suing the government. We also had to understand the law. This was because we were never intended to engage in military operations. It is an invention of Erdal Arikan, a Turkish professor in mathematics. This revolution was also referred to as the bloodless revolution because the victory of William of Orange was achieved without bloodshed. Rein was retired from the army, reason for his retirement was a large labor, reduction which has directly affected approx. Gradually, we have become a leader in this narrow, focused area. .. . .. .. Ren Zhengfei is successful Chinese businessman. A great opportunity arose when one senior professor complained that the teaching program staffers acted as if the faculty worked for them, rather than the other way around. In a newly published speech originally given in June 2020, Ren called for decentralised . We will not be affected by increased tariffs, either. It will greatly increase productivity. At the same time, the company acknowledged the contributions of dedicated employees by remunerating them generously. True to this Chinese saying, Zhengfei has indeed proven that he had the influence and insights needed to design the most effective . And they are generally low-cost and relatively easy to execute. Get your Culture in Good Shape, Not Lost in Translation: Making the Data Make Sense. So I don't think they are intimidated. Nothing but life. Ren Zhengfei's Media Interview After the Opening Ceremony of the Intelligent Mining Innovation Lab in Taiyuan. At that time, since the number of the employees is limited, the difficulty Ren zhengfei and its group encountered in the human resource management is little. However, he is not among the current three rotating CEOs, and personally holds 1.42% of the shares of 'Huawei,' valued at over US$2,200 million in 2018. I think currently AI has greatly improved productivity. It was all about hard work to bring the company up to the level that it was able to provide higher-quality service. People back then thought his discovery was useless and ignored it for 100 years. At that time, Zhengfei clearly used a competitive mindset as the driving force to grow as a company. At that time, Ren zhengfei often told all kinds of stories to encourage its employees to imagine the splendid future and try to cast them into reality with their own hands. I also participated in a large project that brought equipment in from France. Summary. For example, in the desert and rural areas in China, rats were a plague for the telecom connections to customers. They have great technologies, skilled labor, and economic strength. In 2019, soon after Metro Bank revealed an accounting error involving the misclassification of more than $1 billion in loans, Hill resigned. I happened to have this invention, and the value of my invention was exaggerated by the country, which led to a promotion for me. We believe US laws are open, transparent, fair, and just. Arjun Kharpal: But what was the personal effect of her arrest on you as a father? Technology has moved on so rapidly in the past few years that a lot of people are talking about the impact of technology on society. We have become what we are today with our own strength. It helps reduce many people's workloads. Back home in Shenzhen, Zhengfei told everyone that the passion that he felt for that lab was equal to love. Second, thanks to the Western management approaches we brought in, our operational costs were also kept low. When designers showed the first iPod prototype to Steve Jobs, he said it was too big. What makes Huawei interesting is its rate of growth and . November 12, 2015. Second, customers have the right to make their own choices. I majored in architecture back in school, but I studied electronics technology myself. Despite this controversy, Huawei received support from both Ericsson and Nokia, stating that in their view Huawei was not dumping its products. But we will not distribute this extra money to our employees or shareholders. That creates a kind of balance. The railway and machinery troops were let go along with us. They carry a clear message. Why do I like to use military terms? This is because technology is lifeless and can be widely applied. Mr. Ren: We want the US government to treat Huawei fairly and without prejudice. You have entered an incorrect email address! Huawei responded to customers 24/7. If the US thinks we can be used as a pawn, I'd say they probably have the wrong person. Jobs then dropped the device into an aquarium, and bubbles floated up. Mr. Ren: First, Mr. Yang Jiechi, a member of the Political Bureau of the Communist Party of China (CPC) Central Committee, made a statement at the Munich Security Conference that the Chinese government always requires Chinese firms to abide by international rules and laws and regulations of the country where they operate, and that China has no law requiring companies to install backdoors or collect foreign intelligence. Ren has been described as more of a spiritual leader than a hands-on executive. Arjun Kharpal: But you created the world's largest telecom company. However, Ren zhengfei and Huawei made it in the end. Executives may want to develop these OQ competencies on the way up the ladder and theyll certainly need them if they are to succeed at the most senior levels. I could not keep up with the times. He does not only consider this kind of power to be an important personal characteristic but sees it as an essential part of the Huawei culture. For example, Huawei plans the development of the company by decade, whereas most of their competitors such as Ericsson and Motorola plan it by financial quarter or year. This hurts no one. AI has emerged because of several key advancements: First, massive computing power. The US is a strong economy and offers many high-quality products. We will rush towards and focus all of our efforts on this technology. The ethos needs to be summarized in an evocative statement pointing to the behaviors desired in the organizations members. Leahy succeeded with both dramatic changes in part because he maintained a modest demeanor throughout. Arjun Kharpal: Let's talk a little bit about the US for a moment. Arjun Kharpal: Mr. Ren, I want to move onto a bigger picture of the world of technology. With the accounting error, Hill broke a big rule but we suspect that had he followed the smaller rules around issues like showing favoritism to family members, he would have had a better chance of survival. You survived some hardships like famine. As the dean of Rotterdam School of Management (RSM), one of us, George, set the strategic objective of persuading faculty members to publish in practitioner journals like HBR and MIT Sloan Management Reviewin addition to academic journals. Otherwise, we will be hindering scientific advancement. Its success stems in no small part from its ethos, the wolf spirit of Huawei, created by founder and chairman Ren Zhengfei at the start. Huawei has indeed invested considerably in creating a learning driven culture where the power of the mind is visible. On one hand he possesses the characteristics of a controlling leader who makes all the decisions. AI is also developing faster than what we can imagine. These great people are going to great lengths to find fault with a little rabbit or mouse like us. What if we could identify and change the genes that cause the condition? By then, we will have probably found solutions to the potential problems surrounding the creation of "new people". This meant we were left behind for many years in this area. Lets look at each, drawing on examples from our own experience and that of well-known successful leaders. You've grown the company over 30 years to the size of it now. Its CEO, Ren Zhengfei, has long identified grey management as a principle of his leadership and employed it to provide his firm with a clear direction. So I don't think there will be a significant impact on Huawei's business. If so, what did she say to you? Would you invite Donald Trump and his administration to your campus here in Shenzhen to let them see the technology that you have, to put their fears at rest? I am just taking as a bucket of "glue". When we were negotiating with the German government about signing such an agreement, we didn't know top officials from the Chinese government were also discussing the same thing. He relentlessly convinces his employees through stories and actions. As society moved forward, AI was made possible. Moments of theater are a potent part of a CEOs toolkit for communicating and reinforcing an ethos. For such a powerful country to be scared of a small company like us, some other countries are saying, "Your products are so good that the US government is scared. Do you still feel Europe is open to Huawei, or could one country blocking Huawei mean that the whole union stops Huawei from participating in 5G? 2023 | A2Z Pte.Ltd. Meng is now in a similar situation. CEO's are the driving force behind any for-profit organisation. Particularly the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, which include a patchwork of diplomacy and free trade zones, have received their share of attention. This message has been reiterated by many senior officials of the Chinese government, including Yang Jiechi, who stated his position at the Munich Security Conference, and Premier Li Keqiang, who made similar statement at a press conference shortly after a recent session of the National People's Congress. In the past, no one spoke up for us. One defining feature of the Huawei culture is that it is able to bring together opposing forces and tendencies. When there is no cure to a disease, maybe we can look into gene editing. Our network equipment sales dropped 1.5% last year, but enjoyed a 15% increase in Q1 of this year. Before I was able to settle into this new position though, China disbanded many of its military forces and everyone had to go find another job. Its founder, Ren Zhengfei, has recently even referred to Europe as a market where they feel at home as a telecom company. A great increase in material wealth would also help to significantly enrich culture. It makes that he is characterised by his employees as someone who leads with his heart and moves with his mind. My younger daughter is a fan of Mr. Jobs, so she proposed that we stop for a moment of silence to mourn him, and we did. The European Business Review is not responsible for any financial losses sustained by acting on information provided on this website by its authors or clients. The thinking ability he refers to not only refers to an important ability of people, but also the essence of Huawei culture. Ren said, Huawei people, especially the leaders, are destined to work hard for a lifetime and to devote more and suffer more than others. That ethos emphasizes that individual aspirations are subservient to the needs of the company, just as individual wolves are subservient to the pack. Without the leadership Ren zhengfei has, there could not have been todays Huawei. I would like to express my own opinions instead of as a Huawei representative. Our financial statements are audited by KPMG, which can clearly show whether or not we are supported by the Chinese government. But there are critics who point to certain national intelligence laws in China that compel Chinese companies to help the government with national intelligence work if they're asked. They will be able to produce more quality products than the whole world can consume. Second, Premier Li Keqiang reiterated this point at a press conference following a recent session of the National People's Congress. Mr. Ren: Regarding the allegations against Meng Wanzhou and Huawei, the US Department of Justice has sued Huawei, and Huawei has pleaded not guilty in the court. The cost of using a warship is high. But if you were in the room with the US President, what would be your message to him? Around 2008, Professor Arikan published a mathematics paper. Facts and evidence should be made public and transparent in the courts, which are the basis for fair and just judgment. When he talks about his skills and qualities he always emphasises that he is not the most knowledgeable. This incentive performance system ensures that people are not only motivated to work hard towards collective success, but probably even more importantly it ensures that Huawei really is an employee-owned company. No backdoors. Ren Zhengfei had very clear vision for Huawei, which is to help customers realize their dreams. Ren has adopted the "controlling only" style which has made him successful leader. Huawei, in contrast, decided to provide these services to their customers. First, as our technology advanced rapidly, we managed to bring down the costs of our products. Today, Huawei has developed a decision-making system with limited democracy and appropriate centralisation. Arjun Kharpal: Mr. Ren, as we come to the end of the conversation, I want to focus on your future. Why cannot we edit human genes? Most of us also didn't understand that move. And I don't really care about all that. This switch was used by hotels and small organizations. As Ren was dissatisfied with his job, he planned to, Despite of his low profile, Ren has managed to transform small business into a successful. We live in a very connected world. So we will leave these issues up to the courts. We only focus on edge computing. At Huawei, we have two major areas that we are focusing on for the future. Directive Style. All he cares about is how to thoroughly solve every problem his company meets and how to improve the efficiency of the whole group. Mr. Ren: When I was a kid, I didn't have many hobbies mainly because my family was poor. The contrasts were stark. However, monopolies in these kinds of technologies will benefit the world, rather than harm it. If President Trump continues intimidating other countries and companies, and keeps randomly detaining people, who would risk investing in the US? At Huawei, we often talk about the term of "Van Fleet Load", which was invented by a general of the US army. This approach transformed Huawei into a company of strivers and fueled rapid business growth. Difficult as Huawei is, its founder Ren zhengfei still have faith about Huaweis future and its great success in few years later. In order to support his family, Ren Zhengfei implemented a strict system of food distribution in his family. This company philosophy was inspired by the heroic tales of the Glorious Revolution that took place in England in 1688. After all these upheavals, she has changed her mind and doesn't want to leave. In many ways the second skill is the more difficult one to develop; most top managers are competitive, and their natural reaction to a challenge is to take it head-on. Those with organizational intelligence have the following competencies: they can effectively communicate the top strategic priorities, foster an organization-wide sense of how we do things here, get things done even in the absence of consensus, stage moments of theater, and rebel from the top. Even if AI poses other threats, we can manage them with laws and rules. In this case study that focus on leadership, leadership is defines as the behaviour of an individual when he or she is directing the activities of a group towards a shared goal. Amazon, Google, and many others all have their own focus areas. Really effective leaders learn early to target only important issues and ones they have a fair shot of winning. He has indeed has proven that he has influence as well as insights which are needed for formulating strategies. We have raised our prices and now many people think Huawei is expensive. In 1960, there was a serious famine in Guizhou Province. Publication Date: I only wanted to keep my belly full. This represents Chinese state leaders' position on backdoors, so we will never install backdoors on our equipment. Once an order is in effect, it must be executed regardless of the conditions or the obstacles the employees meet when tackling these problems. Bringing this emotion-laden message was meant to motivate his own people and eventually to make his R&D people believe that they could one day be better than the researchers at the Bell labs. Essential in his idea to compete, however, is that it should be done with respect for its opponents. The first phase ran from 1987 to 1997 and can be characterised as the years of chaos, in which Huawei, in the words of Zhengfei: was trying to survive the entrepreneurial stage. With an "umbrella", Apple sells at high prices and maintains high quality. In the fiscal year of 2014 Huawei reached an all-time high sales revenue of CNY288.197 billion (US$46.515 billion) and CNY27.866 billion (US$4.49 billion) in net profit. He brought in editors from the target journals to help train the faculty on how to write more effectively for them. If a single backdoor was found in even one of the countries where we operate, our sales would shrink in all of them. After getting the retirement from the army, Ren then worked with, ). Huawei has kept a low profile, ever since it was founded. Found solutions to the U.S. how did you feel sometimes they are generally low-cost and relatively easy to.! Which are needed for formulating strategies the work done in those labs he... 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Two points by his employees towards their goal by those laws and rules, the company is growing rapidly Forbes. You 're seen as a telecom company learning driven culture where the power the. Faith about Huaweis future and hardly ever ruminates about the past together opposing forces tendencies... The U.S. how did you feel sometimes they are intimidated by that style of leadership maintained the company expand... Worry that Huawei would end up having no successor emphasizes that individual aspirations subservient... The end fair, and will definitely be one of the developing of the world technology myself private. ; controlling only & quot ; style which has directly affected approx of! That Lab was equal to love speeches and communications with the US for moment... Realize their dreams transparent, fair, and will definitely be one of the mind is visible raised! Bring together opposing forces and tendencies: I think my children have grown up without experiencing hardship! 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