Before COVID-19 became a reality, the business world in China was still very occupied with understanding how global success could be achieved for Chinese companies (De Cremer, 2017). In light of that question, I was asked by several universities to talk about the management structure and leadership style of one of their biggest business champions, which is Huawei. Huawei was founded in 1987 in Shenzhen by Ren Zhengfei and has in the meantime transformed itself into one of the giants in the world of telecommunication technology, infrastructure and smart devices. They have become a global player by employing more than 194 000 employees across more than 170 countries and regions. In the fiscal year of 2019 Huawei’s revenue reached CNY858.833 billion (US$122.972 billion) and CNY62.656 billion (US$8.971 billion) in net profit (in 2018 revenue reached CNY721.202 billion and CNY59.435 billion in net profit). They currently rank number 61 in the Forbes 500 list.
When I finished my talk students could ask questions and especially one specific question has stayed with me. This student asked me whether I thought that Ren Zhengfei would have any regrets today concerning his company. In itself an intriguing question, but also not that surprising given the fact that at the time of the talk the conflict between the US and China, which is basically one of technology, was more or less escalating. Indeed, the trade war between the US and China clearly expressed the fear that the party possessing the most advanced technology will eventually gain all the benefits, ranging from market share and economic prosperity to political influence and global leadership. As a result, the US started to impose sanctions on high-profile Chinese companies and the biggest one of all was Huawei (De Cremer, 2019).
Clearly this trade war situation elicits many negative emotions and one emotion that is usually felt if negative things happen to you is regret. Regret is a negative cognitive or emotional state that is caused by blaming oneself for a bad outcome. When one feels regret one reflects on what could have been or how a given situation could have been different. So, the question of the student was clearly about whether Ren Zhengfei, knowing the situation in which his company ended up, would regret the decisions and actions taken in the past. After carefully considering my response for a few seconds, I said – in line with Edith Piaf’s song “Non, je ne regrette rien” (I have no regrets) that I did not think he had any feelings of regret. Of course, the follow-up question was asking why I thought so. In response I noted that Ren Zhengfei considers any event in its own historical context (De Cremer, 2018). He loves historical references so much that he once argued that it is history that has determined the existence of Huawei. Specifically, if China didn’t open up, Huawei would not exist; if private companies would not be allowed, Huawei would not exist and so on. So, I explained that based on his tendency to account for the historical perspective, he likely is a person who accepts history as it is. In other words, his response to the student’s question would likely be that ‘The company that Huawei is today is probably the company they were supposed to be.’ Such reasoning has no room for regret.
In order to understand why I believe that this response would also likely be Ren’s response we need to go back to see what the DNA of the company is and especially how the founder has shaped the way the company looks at the world. To do so, below I identify four principles that drive the perspective and hence leadership of Huawei’s founder.
1. Do not try controlling what has happened, but accept
Ren Zhengfei is known for using vivid images and practicing the art of storytelling whenever he introduces new ideas or talks about Huawei’s journey and ambitions (De Cremer & Tao, 2015). In this process he uses many historical facts to illustrate his vision and shape the future actions of the company. In this sense he does not challenge the past but uses it as it is to make a point for the future waiting for them. Indeed, every past example has a meaning for the future! And, in that sense, Ren Zhengfei realizes that he and all other executives in the company have no real influence on how time and history influences everyone’s journey. To illustrate this belief, he once noted that one’s life journey is “like riding on a flying carpet. It is not us who are flying, it is the carpet carrying us upwards.”
All of this makes clear that for Ren Zhengfei, things happen for a reason and thus should not negatively influence you (read: make you regret things) in the present. A clear example is how in 2003, Huawei was about to sell itself to Motorola for $7.5bn’ a deal that would have significantly impacted history of telecommunication. After a few weeks of negotiation, a deal had been agreed, but eventually it never materialized. Outsiders today are still wondering what would have happened if Huawei would have become part of Motorola. Would Huawei have saved Motorola (the latter company was eventually eclipsed by other companies)? No one knows, and according to Ren Zhengfei, the only thing that matters is that Huawei has become one of the most important, and currently most controversial, telecoms supplier in the world. So, the past makes what company you are today, and we can learn from it, but do not dwell on it. The focus is always the future, and this brings me to the following principle.
2. Stay focused on the things you can control
Leading a company requires that you can connect the past with the future by doing the right thing in the present. Dwelling too much on the past and not realizing its potential to engage in meaningful future action is a waste of time. As a matter of fact, according to Ren Zhengfei, no value can be created if one sticks to nostalgic feelings and gets caught up in it. As point 1 above illustrates, his belief is that history decides and not you. Therefore, stay humble and realize that there are many things you cannot control. Being aware of this fact of life should motivate you to focus on the things that you can control. Ren Zhengfei is especially a big fan of being focused on what matters to make a difference for the company in the future (De Cremer & Zhang, 2016).
A focus on well-defined priorities is one of the secrets that Ren Zhengfei believes will contribute to the ability of a company to overcome negative events and hence survive on the longer term without being consumed too much by negative emotions. In 2015, Ren Zhengfei noted the following in support of this belief: “It’s been a rough 28 years. Huawei has remained focused on our strategic business of ICT infrastructure development. Over the past 28 years, over 100,000 people have fixed our sights on a single opening in the gates, charging it over and over again. Huawei’s investment strategy is just that: Fast beats slow. Focusing on one point is actually a fast-beats-slow strategy. That’s why it generates results.” Thus, by knowing what it is you want to achieve allows you to transcend the difficult times and the accompanying negative emotions. One reason why this strategy may work is that it keeps your feet on the ground and installs a kind of recognition that nothing is a given and that hard work will always be needed. Warren Buffett indeed once noted that staying humble helped him to stay focused on what really matters, in a similar vein this kind of humbleness can be found in Huawei that hard work combined with a strong focus is needed to survive.
3. Work hard to achieve your priorities
Knowing your priorities allows you to stay focused even when things do not go according to plan. When companies have experience a crisis, a risk is that negative emotions stay and low energy fuels the organization. Being aware of and endorsing the right priorities provides a kind of guidance that can avoid wasting too much energy and getting caught in sentiments of regret, disappointment and an overall sense of helplessness. Of course, staying focused requires a certain attitude among your work force. That is, it requires that they are willing to go the extra mile to survive, work hard, and persist even when things don’t go their way. Ren Zhengfei has expressed on multiple occasions that Huawei is willing to suffer and work its way through any crisis. Huawei employees believe and are convinced that more effort, dedication and passion will eventually help the company to achieve their goals. As one Huawei executive said when talking about Ren Zhengfei’s way of making decisions; even if we only have 30% confidence in the decision then we will still take the risks, because we believe that the other 70% will come from our willingness to sacrifice and show dedication at every level of the company.
4. Surviving means sacrificing
Why would such a fierce leader as Ren Zhengfei allow himself to accept situations and maintain a focus on the future rather than being victim to negative sentiments? The most plausible reason may well be the fact that the focus of Huawei’s founder is by default directed towards the future – as he is concerned mostly about his company surviving as long as possible. Consider the following anecdote: On one occasion, someone asked him what Huawei’s most basic goal was. He replied: “Survival.” The person then asked what Huawei’s ultimate goal was. Ren Zhengfei replied that it was also survival. And, it’s not only Ren Zhengfei who has this belief. It is a belief that has taken over the company. For example, in the foreword of Huawei’s 2019 report rotating Chairman Eric Xu noted at one point that “survival will be Huawei’s first priority.” As it usually goes within Huawei, the way to survive is to “optimise” their own functioning and install – once again – an attitude “to fight inertia and rid themselves of complacency.”
This focus clearly underscores the importance that Huawei assigns to being willing to keep fighting when things are rough because they want to keep improving to stay around. Obviously, such a request implies that it is expected that Huawei employees are willing to suffer and sacrifice their interests when being asked. Such a culture clearly does not work if feelings like regret and disappointment would linger too long. The most compelling example of Ren Zhengfei’s belief that working hard for the future demands sacrifice concerns what he said when his daughter Meng Wanzhou, the Chief Financial officer of Huawei, was arrested in Montreal in the face of the US-China trade war. Ren Zhengfei expressed his gratitude to his daughter for her year of “suffering” and at the same time added that he believed that this experience will make her stronger. This response makes clear that the willingness to suffer is recognized and applauded but at the same time also considered behavior that one would expect from any Huawei employee.
To conclude, the love for his company, the desire to survive, the sacrifice expected from every Huawei employee and the acceptance that history cannot be controlled, allows us to infer that it will indeed be likely that at this moment the founder of Huawei is not the person to allow the company to be consumed by feelings of regret. Rather, all the beliefs he has installed in the Huawei culture clearly signal that since the foundation of the company he has worked on creating a sense of community where Huawei employees can draw their strengths from.
About the Author
David De Cremer is Provost ‘s chair and professor in management and organizations at NUS Business School, National University of Singapore. He is the founder and director of the Center on AI Technology for Humankind at NUS Business school; which is a platform developing research and education promoting a human-centered approach to AI development. Before moving to NUS, he was the KPMG endowed chaired professor in management studies at Judge Business School, University of Cambridge. He is named one of the World’s top 30 management gurus and speakers in 2020 by the organization GlobalGurus and has published over more than 300 articles and book chapters. He is also a best-selling author with his book Huawei: Leadership, culture and connectivity” having sold more than one million copies. His newest book “Leadership by algorithm: Who leads and who follows in the AI era?” came out in print in May 2020.
References
- De Cremer, D. (2017). What it takes for Chinese companies to succeed abroad. The World Financial Review, November-December, 65-68.
- De Cremer, D. (2018). Know your history! Why historical awareness makes you a better leader. The Political Anthropologist.
- De Cremer, D. (2019). Hard-Wired to survive in the UC-China trade war. The European Financial Review, August-September, 7-11.
- De Cremer, D. & Zhang, J. (2016). Why Focus-based Leadership is important to Huawei’s Business Strategy. The European Business Review, May/June, 40-43.
- De Cremer, D., & Tao, T. (2015). Leading Huawei: Seven leadership lessons of Ren Zhengfei. The European Business Review, September/October, 30-35.
