Huawei’s Culture Is the Key to Its Success

1. Customer-First Attitude

Strong leaders provide a sense of purpose to their people, and Ren Zhengfei (Huawei's founder) is no exception. His first and foremost concern is the customer. Huawei distinguishes itself from the competition in this regard. In the early years of Huawei everyone in the company had to turn their eyes to the customers and their backs to the bosses. For example, several years ago an institutional investor delegation led by Stephen Roach, chief economist for Morgan Stanley, visited the Huawei’s headquarters in Shenzhen. Such visits were usually made by venture investors hoping to get a buy-in to Huawei. Ren Zhengfei asked Fei Min, his executive vice president of R&D, to entertain the delegation. Later, Roach said, in disappointment, “He was rejecting a team with $3 trillion.” The explanation by Ren Zhengfei was quite telling: he told us that he would meet any customer in person, no matter how small they were, but that Roach was not a customer.

Another example of this customer-first attitude is in desert and rural areas in China, rats often gnawed the telecom wires, severing customers’ connections. The multinational telecom companies providing service at that time did not consider this to be their problem, but rather that of the customer. Huawei, in contrast, viewed the rat problem as one the company had the responsibility to solve. In doing so, they acquired extensive experience in developing sturdier equipment and materials such as chew-proof wires which helped them later on to gain several big business accounts in the Middle East, where similar problems stymied the multinational firms.

Since then, there have been other projects where Huawei experienced severe climate challenges, such as building the highest wireless communication base station in the world (6,500 meters high on Mount Everest) and building the first GSM network within the Arctic circle. These have helped acquire useful knowledge. For example, when Huawei expanded their 3G market in Europe, they noticed that European carriers expected base stations to be more compact, easier to install, greener, and more energy efficient, while offering wider coverage. Based on these customer needs, Huawei became the first company to launch the concept of distributed base stations that enables radio access for large to small private networks. This innovation made it cheaper for carriers to deploy base stations, and was popular with European carriers.

2. Employee Dedication

Huawei emphasizes that the only way to obtain opportunities is through hard work. For example, in the early years of the company, every new employee was given a blanket and a mattress. Many of them would work late into the night, then sleep in their offices, perhaps taking a catnap during lunch again the next day. As one Huawei employee said: “The pads were to us a representation of hard work in the old days and this idea has now been translated into the spirit of being dedicated to do the best in anything we do”.

A dedicated and committed work force makes Huawei more competitive. Huawei does it in part with the type of incentive performance system the company employs. Huawei is not a public company, and is in fact owned by the employees. Ren Zhengfei’s shares account for nearly 1.4% of the company’s total, and 82,471 employees hold the rest (as stated in Huawei’s 2014 Annual report). The idea underlying this scheme is that Ren Zhengfei wants to share both responsibilities and benefits with his colleagues. As he puts it, he wants everyone to act like the boss. However, only those who perform well enough qualify to participate.

Ren Zhengfei has emphasized that avoiding an IPO and hewing to the current employee-ownership structure is what helps the company maintain a strong collective fighting spirit.

3. Long-Term Thinking

The employee-ownership arrangement not only helps Huawei attract and retain dedicated employees, but also allows the company to plan for the long term, stay close to their goals and long-term vision. 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. Being privately held has allowed Huawei to work on its 10-year plans, while its competitors struggle to follow near-term fluctuations of the capital market.

For example, Huawei has introduced the use of a rotating CEO system in which three deputy chairmen take turns acting as CEO for six months each. At the same, time Ren Zhengfei maintains his oversight role, acting as a mentor and coach for the acting CEO. While it will make the company less vulnerable if one chief fails or derails.

4. Gradual Decision-Making

Ren Zhengfei is known for avoiding quick decisions and forcing himself to take time to reflect. He ties this in part back to their ownership structure: it keeps the decision-making power under company control – no outside investor will gain relative control over Huawei. They have much more freedom and less pressure from the market to consider their next steps to take. Their system of rotating CEOs helps support a gradual, more democratic decision-making process. It also helps Ren Zhengfei make a gradual decision about his ultimate successor.

Huawei also emphasizes “the power of thinking.” For example, efforts are made to ensure that intellectual exchange happens as a matter of routine. Executives are urged to read books outside their area of expertise and books have to be present in each office. Furthermore, ideas are communicated frequently to every employee by both senior executives and Ren Zhengfei. Feedback is always invited across the company to improve those ideas that will ultimately feed the future vision of the company.

Edited by: 浪子

Bibliography

David De Cremer and Tian Tao. (2015). Huawei’s Culture Is the Key to Its Success. Retrieved from 
https://hbr.org/2015/06/huaweis-culture-is-the-key-to-its-success