The Art of War as a Business Strategy

War as a Business Strategy

By David De Cremer

Competition and rivalry are considered a key aspect for effective, innovative and growing businesses to emerge. As Bill gates noted: “Whether it’s Google or Apple or free software, we’ve got some fantastic competitors and it keeps us on our toes.” In a way no one questions the need to have a competitive mindset when being in business. By having competition between companies, we believe that innovation will prosper and hence customers will benefit. For any company with a strong focus on customers, competition is thus a necessity in the business strategy that they adopt.

But, despite the many benefits that people see in business competition, the competitive aspect itself also can bring pressure and unintended negative consequences. As the former Australian tennis player, Rod Laver, once said: “The time your game is most vulnerable is when you’re ahead. Never let up.” Indeed, a negative consequence of competition is that it can put a lot of pressure on business executives and their companies. People may ruminate more about what could go wrong and how it would affect their future business developments, especially so when the company is leading or ahead of the pack. One such example of a business executive who worries a lot about surviving in an era of business competition is Huawei’s founder Ren Zhengfei (De Cremer, 2019). Huawei, founded in 1987 in Shenzhen, rose to the global leading spot in 2012 when it surpassed Ericsson, and since then experienced what it meant to transform from being a follower to becoming a leader in the industry (Tao, De Cremer, & 2017).

It is well-known that Huawei’s founder is very much aware of the fact that his company may die one day. He is so much aware of this outcome that he is occupied continuously with the question whether Huawei will survive. A famous story is that in times of crisis Ren Zhengfei will, without surprise, say that the fear of not surviving keeps him awake at night. But, even when times go well, Ren Zhengfei will still think about whether Huawei will survive. Survival as such has become an important part of the company’s DNA and this desire is always there, underlying every action and decision. For Huawei, competition has become fierce in the last few years, especially so since the US has portrayed the company as the poster child of the Chinese government. As a result, the company is directly impacted by the trade war that’s going on between the US and China as was illustrated by the decision in 2018 by Canada to arrest – because of a provisional US extradition request – Ren Zhengfei’s daughter, Meng Wanzhou. According to the US, in her role as CFO of the company, she violated US sanctions rules against Iran by letting Huawei do business with Skycom Tech – a company alleged to work closely with Iranian telecom firms.

According to the US, in her role as CFO of the company, she violated US sanctions rules against Iran by letting Huawei do business with Skycom Tech – a company alleged to work closely with Iranian telecom firms.

Given these events, it then also came as a surprise to many that Ren Zhengfei in a recent speech where he explained the need for the company to keep expanding outside China, uttered that Huawei still had much to learn from the US in terms of science and technology (Yujie, 2021). For many observers, the message was somewhat hard to believe, because isn’t the US the nation putting the most pressure on the company and constraining its abilities to do business at a global scale? So, why would he be so positive about the US. It’s war, there’s competition, why then show behaviours that indicate the company looks up to the US? These observations identify an interesting point to address, which is what war and competition actually means to the one leading the company that is under attack. Indeed, as it seems Ren Zhengfei has a specific connotation to what war entails and how competition and cooperation relate to each other.

First of all, it’s no secret that Ren Zhengfei always had a positive attitude towards Western knowledge in general and management insights that came from the US more specifically. In an interview with CNN, Ren already expressed his warm feelings towards the US when he noted that he likes how frank Americans are. Their ability of not being afraid to ask any question they want made him a fan of the US at an already young age. Even today, he stressed, he still considers the US a great nation. In several of those interviews, he has repeatedly said that he really gets US culture and really likes their take on how to manage a company. In fact, it is somewhat of a running joke that Huawei is actually a US-made company, because most of their strategy, leadership and management systems including human capital management originated from collaborations with US companies like IBM, Hay Group, PWC, Mercer Consulting and Accenture.

Second, and maybe most importantly, Ren Zhengfei, being somewhat of a philosopher, clearly read Sun Tzu’s master piece “The Art of War” very well. In this book, Sun Tzu outlines his view on military strategy and thinking and identifies the important principle that one should always be military prepared to maintain peace and social order. Looking at how Ren Zhengfei approaches the current war with the US, his focus is also clearly on being ready for the fight, but nevertheless trying to avoid it.

Huawei is indeed ready for the fight. The company has a strong belief that they can remain the biggest in the world. In fact, they believe that even if the US does not allow them to do business, they have many other customers to serve who want their products. Ren Zhengfei endorsed this point of view by stating that “the world cannot leave us because we are more advanced”. In line with this believe, it has been noted that Huawei has doubled its efforts in new business areas such as cloud services and smart cars (Chiu, 2021), whereas at the same time establishing many strategic partnerships with the major telecom players in Southeast Asia (De Cremer, 2020) and Africa (Nyabiage, 2021). So, Huawei does not seem to be too impressed by the US, exhibits confidence, and especially seems prepared to pick up the fight for survival.

Huawei does not seem to be too impressed by the US, exhibits confidence, and especially seems prepared to pick up the fight for survival.

At the same time, however, Huawei has clearly adopted the thinking of the “School of the Military”, which advocates being ready for the fight, to demonstrate your readiness, but have the goal to maintain harmony and peace. This thinking has been made popular by Sun Tzu’s book “The Art of the War”, in which one important wisdom is that “The greatest victory is that which requires no battle.” So, what is clear in the attitude and actions of Ren Zhengfei is that he’s prepared to continue fighting, but that he will avoid engaging or initiating the fight. In fact, he has recently noted that Huawei technologies must remain open and continue to grow in international markets. And, in that process of continuous striving for growth and openness, Huawei stresses the importance of learning from the US. According to Ren, the fact that the US is constraining Huawei in its growth, should not blind them to still recognize them as a teacher and learn how they work. If we don’t we will only isolate ourselves, he noted. Such open and welcoming approach to what many consider the enemy again fits well with Sun Tzu’s thinking, and especially so with the principle that “To know your enemy, you must become your enemy.”

It’s a common trait of wise leaders that when the “heat is on” and war seems eminent, the primary concern should be on preparing for a fight, but with the intention for the fight never to happen. Don’t show weakness (prepare), but don’t act as an aggressor (do not fight), seems to be the way to motivate Huawei’s workforce to keep going and at the same time being innovative in making the company grow. In times of crisis, leaders have an important responsibility to ensure that the company reduces uncertainty – and promoting confidence is one way – while at the same time always being on the look-out for opportunities that can remove the crisis element . As such, the main lesson from Sun Tzu – in light of Huawei’s current strategy – is that today’s leaders may need a sense of confidence combined with an agile and open mindset more than ever.

About the Author

David De Cremer

David De Cremer is a 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. Before moving to NUS, he was the KPMG endowed chaired professor in management studies and current honorary fellow 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, one of the “2021 Thinkers50 Radar list of 30 next generation business thinkers” (an annual ranking that the Financial Times deemed the “Oscars of Management Thinking”) and included in the World Top 2% of scientists (published in 2020). His latest book is “Leadership by algorithm: Who leads and who follows in the AI era?”

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.