Mysterious power behind the success of Huawei
Published on: Saturday, July 08, 2017
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WHAT do aging, agriculture and tourism have in common?
These three areas of high economic and social importance were of great concerns to the Prime Minister of Thailand, General Prayut Chan-o-cha, who then decided that they need to be top development priorities.
With this the Thai Ministry of Digital Economy and Society, and Ministry of Science and Technology collaborated with Huawei Technologies (Thailand) to develop a roadmap to uplift these sectors with digital technologies.
Having just visited Huawei’s headquarters in Shenzhen during an official trip, I was most impressed by their enormous success. I was also presented a book entitled “Huawei: Leadership, Culture and Connectivity” which had me hooked from its first page.
Its founder Ren Zhengfei started Huawei, now the world’s largest telecommunications equipment manufacturer, at age 44 in 1987 after leaving his job as a military engineer.
Huawei was born during Deng Xiaoping’s launch of a disruptive economic revolution in China.
It was both time of reformation and chaos – China opened her doors to the world, liberating its productivity drive yet attracting foreign companies that charged high prices.
Together with five other partners Ren pooled just enough capital to meet the Shenzhen government’s requirement of that time for a private technology company to have a minimum of Chinese Yuan (CNY) of 20 000 (RM 12,621) as registered capital.
Telecommunications were one of the many infrastructure projects that lagged far behind, with the telephone penetration rate at only 0.38 per cent in 1978. Huawei was founded among eight dominant foreign companies that dominated the Chinese telecom market and over 400 Chinese telecom manufacturers including prominent state-owned enterprises.
I liked how Tian Tao, the author of the book, described the adversity Huawei faced, “They were like a handful of ants taking on a herd of elephants.”
So how did this unlikely company grow into a telecom behemoth of 170,000 staff worldwide, has revenues of US$ 40 billion (RM 172 billion) and was listed as a Fortune 500 company in 2010 within just over two decades?
When I shared on my social media that I paid a visit to its Shenzhen grounds and that I was studying its success, I received many requests, both online and offline, to share the lessons learnt.
I think there are three main takeaways for Malaysia from the Huawei story.
“The mysterious power behind Huawei’s success” is in fact the title of the book’s introductory chapter.
Ren credits the company’s accomplishments to “its customer centricity, dedication and perseverance”.
He made sure that the company was adaptable to change, always innovating and improving, also having a flexible management.
He believes in reinforcing the same set of core values in each of the more than 100,000-member team.
Soldiering on along with a hundred thousand people, most of them knowledge workers, is itself a feat!
Next I admire its unique, incentivising business model. 80,000 of its employees are stockholders in the company while Ren only kept 1.4 per cent for himself. This ambitious equity-sharing program was only possible due to its location in Shenzhen, a pilot zone under China’s reform policy.
This made Huawei a completely employee-owned company where employees benefit directly from its growth!
Of course, they have great appreciation for talents.
Besides offering competitive compensation packages including the share-granting scheme, they have established 16 research and development (R&D) centres globally including Germany, Sweden, Russia, India, Italy, France and the U.S.
They hire 70,000 employees for R&D and spent CNY 76,391 million (RM 48,210 million) in R&D last year, accounting for 14.6 per cent of total revenue.
Emulating the Thai government’s digital economy initiatives and Huawei’s success, Malaysia should take into consideration the Fourth Industrial Revolution when rolling out a digital science, technology and innovation action plan.
We can also learn from the Thai’s five-year digital action plan in its recommended first step is “Data Management” so that the collated data can be subjected to Big Data analysis to monitor the progress of the Action Plan.
The success or otherwise of the agencies and officials in-charge of its implementation will be part of their key performance indicator (KPI), monitored by a Ministerial Committee accountable to the Thai Prime Minister.
On a last note on Huawei, it is surprising that despite all its achievements, Huawei is prepared to welcome failure.
In fact the original Chinese edition of the book was entitled, “Is Huawei the next to fall?”
“Failure will one day arrive at our doorstep, so we must be prepared to welcome it,” founder Ren referred to numerous precedents.
“Huawei has not succeeded; we have just been growing.”
So is Malaysia.
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