In particular, the emergence of AI has accelerated social progress. 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. An organization offers telephone exchange equipment. Ren described it as a blend of three qualities: extreme resilience, a willingness to self-sacrifice, and sharp predator instincts. 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 he needed to adapt his style in light of new challenges at the company. Trusted by 2+ million users, 1000+ happy students everyday, You are reading a previewUpload your documents to download or Become a Desklib member to get accesss. I was naive and took it for granted that I could earn money playing with this huge industry. We invest heavily in our focus area. He made this persuasively clear by literally saying that it is necessary To cut off your feet to wear the shoe (xue zue shi lu). 2023 CNBC LLC. All he cares about is how to thoroughly solve every problem his company meets and how to improve the efficiency of the whole group. None. When attending a summit in Croatia, Premier Li also told our employees not to install backdoors. Second, we strive to become the world's best in edge computing. Our costs were low for two reasons. Consequently, Huawei's performance took a nosedive and employee satisfaction also sank. They also need to follow local laws and regulations and pay local taxes. Microsoft focuses on Windows and its Office Suite. They are out of the ordinary and unexpected. I liked reading books, doing homework, and solving math equations on scrap newspaper. Data is a real-time snapshot *Data is delayed at least 15 minutes. Mr. Jobs was great not because he created Apple, but because he created an era, the mobile Internet era. When two nations or companies meet, they must collaborate to achieve shared success. Earn badges to share on LinkedIn and your resume. Director, CEO Born on October 25, 1944 into a rural family where both parents were school teachers, Mr. Ren Zhengfei spent his primary and middle school years in a remote mountainous town in Guizhou Province. Genetic inheritance was discovered by Gregor Mendel during his experiments on pea hybridization. This is beyond what anyone had imagined. The number of Chinese companies investing and engaging in acquisitions in Europe has seen a steep growth curve. In the Qingdao headquarters of the Chinese company Haier stands a display case containing a sledgehammer. Arjun Kharpal: And part of that R&D budget has gone into 5G, into chips, you've got your own 5G chip. Arjun Kharpal: You mentioned the Ericsson CEO at the time said it was a bold move to jump into this space. He is recognized as a leader who motivates to facilitate innovation at all levels. One key OQ competency is sending messages that reinforce the strategy. Do you feel that technology has been a force for good or a force for evil? Not really, we think. Underlying his focus on story telling is his strategy to energise people and introduce a sense of vitality to the projects that need to be undertaken. 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. 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. The multinationals that were present in China at that time did not consider this to be their problem, but rather that of the customer. 5. The billionaire founder of Chinese telecoms equipment giant Huawei rarely. David De Cremer is the KPMG Professor of Management Studies at the Judge Business School, University of Cambridge, UK, an honorary professor at Wenzhou University, China, and a research fellow at the Ruihua Innovative Management Research Institute at Zehjiang University, China. However, it kills employees creativity and . In Huaweis early years, Zhengfei retained authority on major decisions such as corporate development strategies and culture building, but fully empowered employees when it comes to R&D, manager appointment, compensation & benefit allocation, and other areas. He belongs to rural family and spent his middle and primary school years in remote mountains, where started his career as civil engineer when China faced turmoil because of cultural, revolution. There has also been questions about your past as a communist party member and what that means for Huawei. However, there was no way back. So Microsoft is the winner and it dominates the market. Mr. Ren Zhengfei has been capable of pioneering the development of technology while growing in the world. Sales of our consumer business increased by more than 70% in the first quarter of the year. It's not up to me to designate a successor. However, most of us didn't really understand how important this decision made by the CPC's Central Committee was. 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? President Trump hasn't shared his thoughts with me. Due to his technical skills, He was appointed as a delegate from, PLA for attending the National Science Conference in 1978 (, ).It was a golden opportunity for Rein to lean and gain knowledge, about the field. All rights reserved. This ability derives from his pro-active attitude. If we get caught in the middle, we will be crushed like a watermelon when these two powers clash. That future may be closely related to our business, but it also may not be. How to Hide My Following List on Instagram From Followers 2023, Payke: High Tech to Enrich the Japan Experience, Extending The Time Equation: How TimeXtender Helps Businesses Save Considerable Time, Money by Automating Data Management Efforts, Future-proofing payment systems: the silver lining is in the cloud, Getting the AI edge: An exclusive interview with MobiDev CEO Oleg Lola, Promise and Challenge: AI in the Trade Finance Industry, ZeroBounce COO Brian Minick on Getting Better at Email Marketing, Refining the Search for Executive Talent in Europe, Re-creating the Trust of a Village in a Digital, Global Market: Insights From Trulioo CEO Steve Munford, Want to Succeed in Business? | All rights reserved. Mr. Ren: Huawei is based in China. He is very careful not to feed the myth of his leadership and rather emphasises the importance of working hard in the success story of Huawei. The secret is to take advantage of opportunities to do something symbolic in a surprising, high-impact way that will capture the attention (and, hopefully, the hearts and minds) of the organizations members. At first, we had several hundred employees focus on this point, then we had several thousand, tens of thousands, and now we have hundreds of thousands. It is mandatory to procure user consent prior to running these cookies on your website. Leadership styles. Nevertheless, as the market evolved and employee characteristics shifted, the shortcomings of Ren's management model grew ever apparent. In the words of Zhengfei: Chaos was removed and structure entered Huawei. Gradually, we have become a leader in this narrow, focused area. What Industries are the Best Teachers for International Managers? There was no chance for us to step back and start another business. If no one dares to invest in the US, then how can they make up for lost tax revenue? So instead, we choose to narrow our focus, like a needle point, on a specific area where we can make breakthroughs. Iterative succession must take place in an orderly fashion. Do people know what type of leader you are and what to expect when they interact with you? Action strategy is about making things happen. At the same time, the company acknowledged the contributions of dedicated employees by remunerating them generously. Mr. Ren: Collaboration and shared success. It was analog technology, analog automatic control. 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. 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. Networks belong to our customers, not us. But I don't think Huawei can help solve the disputes between the US and China. 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? We will not be affected by increased tariffs, either. In the early years, Huawei, as a private company, had to battle primarily the State Owned Enterprise (SOE) dominated market. As a leader he was used to delivering a vision and as a mentor he was guiding his employees towards their goal. 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. We will rush towards and focus all of our efforts on this technology. Otherwise, they will become overweight and won't be able to move fast. In a way Zhengfei works hard to always keep clear to himself a kind of meta-view that enables him to make informed strategy decisions. 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. An interesting consequence was that because of this purpose-driven strategy they acquired much experience in developing robust equipments and materials, which helped them later on to win several big business accounts in the Middle-East. Harshal Pawar 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. Arjun Kharpal: In terms of the way he's negotiated with China, some people would say that actually he's managed to get concessions for the US. Every night, we took turns fueling the stove, because if it went out, we would have frozen. 5G made progress. Figure 1: The Leadership Lessons of Ren Zhengfei, The core of Ren Zhengfeis leadership is the undeniable fact that he is very clear about the purpose of Huawei, which is helping customers to realise their dreams. High-OQ leaders send messages that reinforce the strategy and minimize other messaging. I also participated in a large project that brought equipment in from France. 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. The US is a strong economy and offers many high-quality products. Ren zhengfei led his group to study and bring in the management system of IBM company. Specifically, in this section the leadership style of Huawei will be analysed, as well as its impact on the employee engagement and overall organisational performance, and findings and discussions will be presented. High-OQ leaders foster an understanding, or ethos, of who we are. When leaders move from managing individuals or small groups to leading entire organizations, they need to create a shared understanding of whats important and what the organization stands for in other words, an ethos. The differences of leader skill in America and China. And there is concern that some of these large technology companies just have too much power. Everything is limited. In fact, the recent and growing success of Huawei in Europe can also be attributed partly in addition to their service-oriented focus (see again the point of purpose-driven ambition) to their philosophy of explicitly incorporating a strategy to develop cooperative relationships with competitors in the market. (Academic publishing, he believed, was a necessary but not a sufficient condition for RSM to be recognized as a top business school.) What is the problem with translation software that has faster computing? Arjun Kharpal: What guarantees can you give to customers that their data is safe? Huawei is to a large extent no stranger to this system. But if you were in the room with the US President, what would be your message to him? Mr. Ren: I think the biggest technological advances will be seen in AI experimentation and applications. What do you make of his views? 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. 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. As society moved forward, AI was made possible. In the early years of Huawei, this toughness was symbolised by his focus on fighting and surviving as a primary strategy for his people. The US has highly developed technology, but it also has a shortage in labor. The ethos needs to be summarized in an evocative statement pointing to the behaviors desired in the organizations members. Huawei, in contrast, decided to provide these services to their customers. Our subsidiaries in other countries also have this relationship with local governments. Ren Zhengfei's Media Interview After the Opening Ceremony of the Intelligent Mining Innovation Lab in Taiyuan. It will greatly increase productivity. That means there is space in there. Arjun Kharpal: Let's talk a little bit about the US for a moment. Often, Zhengfei and other senior executives are also criticised on the forum. If we didn't abide by those laws and regulations, we wouldn't survive even a day. Particularly the Silk Road Economic Belt and the 21, His ability to critically reflect on past successes and at the same time to identify the future challenges in the next decade makes Zhengfei an impactful business leader in the eyes of many Chinese. Second, develop an organizational persona. Huawei was founded by Ren Zhengfei when he was in the mid-age crisis. Fuelled by his passion, Ren Zhengfei works hard to translate the purpose of the company into a vision aimed at Huawei achieving a world leading status. Arjun Kharpal: Would you support similar ideas about no-spy agreements in other countries, including the US? Mr. Ren: I often talk about staying focused. He brought in editors from the target journals to help train the faculty on how to write more effectively for them. There are various types of leadership styles (Fiaz et al., 2017) 1. On the other hand, Zhengfei is also known to give much freedom when it comes down to how decisions are executed. 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. Everyone at GE knew what to expect from Neutron Jack Welch. This is fundamental to solving problems. I think this challenge will be good for my daughter. He is the founder as well as founder of, Huawei Technologies Co.Ltd. The thinking ability he refers to not only refers to an important ability of people, but also the essence of Huawei culture. If we couldn't make ends meet, we wouldn't be able to survive. But we will not distribute this extra money to our employees or shareholders. Mr. Ren: I can't speak for other companies; I have no authority over them, but Huawei will be the first company to comply with this agreement. Our relationship with the Chinese government is primarily defined by these two points. For example, Huawei equipment broke down frequently, so Huawei technical engineers went to customer equipment rooms to repair the equipment at night when the equipment was not being used. For that, they need organizational intelligence (OQ), or the ability to get the organization to do what they want it to do. We are not that important in the bilateral relations between the two countries. Arjun Kharpal: So that's a metaphor for your daughter? One Chinese company that is increasingly becoming active in Europe is the Chinese telecom giant Huawei. Being born blind and deaf is caused by missing of genes. We are actually learning from US companies. I don't know what the government officials have said, what concessions they have made, or what opportunities or benefits they've received. He realized he would not be able to institute rapid change through persuasion, because the national culture emphasized slow, intensive consensus building. With an "umbrella", Apple sells at high prices and maintains high quality. No backdoors. Huawei is now China's most prominent multinational company and a leader in 5G mobile telephone technology, which will be rolled out across the world in the next few years. In the early years of Huawei, Zhengfei was very much aware that their products did not meet the standards of those of its competitors. Third, follow the small rules so that you can break the big ones. This represents Chinese state leaders' position on backdoors, so we will never install backdoors on our equipment. 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. Media Contact:Clarence ChenCommunications Manager APAC, CNBC InternationalD: +65 6326 1123M: +65 9852 8630clarence.chen@cnbc.com. You've often looked up to Apple as a role model. This will change the architecture proposed by John Von Neumann. He took. Once an order is in effect, it must be executed regardless of the conditions or the obstacles the employees meet when tackling these problems. But what we've seen publicly is senior officials in the government talking at times on Huawei's behalf. They viewed the rat problem as one the company had the responsibility to solve. Where was I supposed to go from there? What company can outperform Microsoft in Office and Windows? This meant we were left behind for many years in this area. 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. Use the strengths of your organization to achieve your goals. On one hand he possesses the characteristics of a controlling leader who makes all the decisions. Don't worry that Huawei would end up having no successor. She will be a hero if she makes it back to us. We believe US laws are open, transparent, fair, and just. Precisely speaking, the core of his leadership strategy is the purpose-driven ambition. Have you thought of retiring any time soon? Now we talk a lot about genetic modification, or gene editing. From what has been discussed above, we can easily find the relationship between the leadership of Ren zhengfei and the rise of Huawei. We are supportive of this. So we will leave these issues up to the courts. Before moving to UK, he was a Professor of Management at China Europe International Business School in Shanghai. By studying law on my own, I realized that only a focused approach to scientific research could lead to new products. In phase 2, running from 1997 to 2007, Huawei became more structured by hiring IBM to implement management structures as these were completely lacking at that time. But I still had to find a job to feed my family. Enterprises can now transfer their funds in other countries back to the US because of a low tax rate of 12%. What's next for Meng Wanzhou in her life, in her career? If a technology is just five kilometers away, we will invest heavily (a business version of a Van Fleet Load). So we would never follow anyone's instructions to install backdoors. Accelerate your career with Harvard ManageMentor. Typically, they've been used in Huawei's products. Thirdly, its his sense of management that helps him to become an excellent leader. Moments of theater are a potent part of a CEOs toolkit for communicating and reinforcing an ethos. Mr. Ren: We are open to Apple in this regard. By taking a set of coordinated actions that add up to a strategic change, a leader can kickstart the process without creating organized opposition. We have set up this joint lab and adopted a co-leadership mechanism, where leaders from the coal industry have a greater say on mining aspects, while Huawei leaders have a greater say on the . Then a large number of our employees would resign, but I cannot leave. China also didn't have its own testing instruments, so I invented one. Arjun Kharpal: Do you have a succession plan in place when you eventually do retire? Sign up for free newsletters and get more CNBC delivered to your inbox. People back then thought his discovery was useless and ignored it for 100 years. Twenty or thirty years from now, outstanding talent may be able to combine genes with electronics technology to create new "people". Zhengfei made this very clear when he said: I do not know anything about technology, but I can bring people together to work for the collective. He is praised for his desire to hire better people in the areas he is weak in, with the ultimate goal to improve the quality of Huawei products and services. I think Google might one day come up with a medicine that helps people live forever, but I may not be able to see it coming. While pursuing this vision, he continuously has proven his ability to design strategies that enabled him to adapt his vision to the challenges that the company faces. That requires stepping out of the normal flow of organizational life. Huawei is now the world's largest telecoms equipment maker. He has maintained the company as private and his management style has been extremely Ren Zhengfei, a founder of Huawei, conducts the personal communication style inspiring employees to achieve high results. I had thought that this was an Internet rumor initially, so I said that without much thought. If they do, they will buy some of our products. You dont want to be like John DeLorean, who battled nearly everything on his way up in and then out of General Motors. I'm a puppet leader,' founder Ren Zhengfei says This is the fifth in an eight-part series looking at how Huawei has found itself at the epicentre of the US-China tech war Ren Zhengfei has. Huawei has indeed invested considerably in creating a learning driven culture where the power of the mind is visible. Mr. Ren: I think the most essential factors to judge guilt are facts and evidence. Even if we were ordered to, Huawei would still not install backdoors. We endorse unified global standards that make installing backdoors a crime. Instead, he believed it was a strength. But this year, once the slate is wiped clean, the financial statements they will release in July will be much healthier. At Huawei, we have two major areas that we are focusing on for the future. Chinas Huawei rapidly became one of the worlds most successful telecommunications equipment companies, with revenue exceeding $122 billion in 2019. Arjun Kharpal: Mr. Ren, you started Huawei over 30 years ago with 5,000 US dollars. In total, 300,000 to 400,000 people have joined Huawei, but only around 180,000 people decided to stay. Because we want to grow our harvest and produce actual results. As far as I know, Huawei has never been mentioned in any of the China-US talks or in any official news releases. Huawei has indeed invested considerably in creating a learning driven culture where the power of the mind is visible. This proves our equipment is secure. Ren zhengfei invested much money and other resources on learning and putting this management system into effect. You are less known internationally. Another strategic objective was better cooperation between faculty and staff. A Division of NBCUniversal. Especially in the entrepreneurial years of the company he used this strategy to be both a strong mentor and leader for his employees. Mr. Ren: In a long run, I can tell you clearly that I will retire as I won't be alive forever but in a short term, it depends on my mental agility as I get older. Data Analysis Methods Every Business Needs To Know How To Perform, Are You Ready to Lead in a Digital World? We live in a very connected world. When Huawei was just founded, the world of communications was extremely under-developed. It will never happen. At Huawei, we often talk about the term of "Van Fleet Load", which was invented by a general of the US army. I would have to repay tens of billions of dollars in debts. In 2019, soon after Metro Bank revealed an accounting error involving the misclassification of more than $1 billion in loans, Hill resigned. When he talks about his skills and qualities he always emphasises that he is not the most knowledgeable. Some US politicians are criticizing Huawei everywhere they go. This is a challenging competency and a powerful one. I believe they may not have the evidence or the facts to prove her guilt. 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. The importance of thinking, in his view, is that it provides the skills to connect the dots needed to work with an agile vision and strategy. During World War II, there was a famous Il-2 aircraft that kept flying after being riddled with bullets from both other planes and anti-air defenses. I felt very uncomfortable with the transition from the military to Shenzhen which was becoming at forefront of the reform and opening-up. We have limited resources and technologies. Back then, it would reach minus 20-something degrees Celsius in the winter. Second, customers have the right to make their own choices. We will need to sort out our problems with the US by ourselves. That creates a kind of balance. Arjun Kharpal: Mr. Ren, as we come to the end of the conversation, I want to focus on your future. Do you think she's a hostage in this broader US-China trade battle? Is that useful to the company, or do you find that a distraction? But Zhang wanted to send the message that even minor defects are unacceptable and that Haier intended to match the quality of any competitor worldwide. Western companies are no different. Get this delivered to your inbox, and more info about our products and services. Huawei's achievements were not created by me alone, but by our 180,000 employees. Difficult as Huawei is, its founder Ren zhengfei still have faith about Huaweis future and its great success in few years later. Our employees are used to the way I speak. Or do you feel sometimes they are intimidated by that style of leadership? China Europe International Business School. Effective moments of theater have three important characteristics. All Rights Reserved. We will not distribute any extra profit to our employees. Beset by internal and external challenges, Huawei needed to completely rethink its approach to business, corporate culture and company management. We need to make our value distribution reasonable. His ability to critically reflect on past successes and at the same time to identify the future challenges in the next decade makes Zhengfei an impactful business leader in the eyes of many Chinese. Mr. Ren: I think my children have grown up without experiencing much hardship. As a matter of fact, one of the strengths that people usually refer to when talking about Huaweis founder is that he is always thinking about the kind of company he wants Huawei to be in the next 10 years. Mr. Ren: I don't know. We set prices based on our costs, which were relatively low. Over the past century, which countries and companies have made the US scared? Create a free website or blog at WordPress.com. Among his other, achievements, Ren is accountable of development of cooperative programs, Chinas interior regions. Figure 1: The Leadership Lessons of Ren Zhengfei 1. As a result, I went back to where I started and jumped into the market economy. Amazon, Google, and many others all have their own focus areas. These figures show that we are still growing, not declining. It is an invention of Erdal Arikan, a Turkish professor in mathematics. 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. And also, some countries have also said that Huawei could be a risk because it could work for the Chinese government and carry out espionage on behalf of Beijing. Zhengfei is a big fan of the practice of story telling and makes extensive use of it as a vehicle to deliver his ideas to employees in a passionate manner. We chose a tough road. Even with those qualities, many leaders fail at the top job often because they dont know how to get the organization to do what they want. Ren innovation skills and technical knowledge. . We don't have much influence over China-US trade relations. Leahy succeeded with both dramatic changes in part because he maintained a modest demeanor throughout. Necessary cookies are absolutely essential for the website to function properly. 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 networking equipment and software is reliable and secure. So AI should be a force for good. And they are generally low-cost and relatively easy to execute. company using his skills and core competencies. The TV channel is available in more than 415 million homes worldwide. Meng is now in a similar situation. First, as our technology advanced rapidly, we managed to bring down the costs of our products. To follow local laws and regulations, we took turns fueling the stove, if. 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