No backdoors. Especially in the entrepreneurial years of the company he used this strategy to be both a strong mentor and leader for his employees. The US government must present evidence to substantiate their charges against Huawei as this lawsuit proceeds. The company is growing rapidly and Forbes has estimated Zhengfei's wealth at $2.1 billion. Despite this controversy, Huawei received support from both Ericsson and Nokia, stating that in their view Huawei was not dumping its products. As can be expected of a man with an army background he served in the Peoples Liberation Army he is known to be intense and tough and never loses control. Meng is now in a similar situation. That requires two skills. It takes a lot to get to the top of an organization: a high IQ, emotional intelligence, technical competence, and a variety of personal characteristics, such as fortitude and resilience. Not really, we think. European countries want to think over all their options a bit. 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? These experiences taught me to endure hardships. With higher prices, we have started earning more. Over the past century, which countries and companies have made the US scared? Mr. Ren: I don't know about technology, management, or finance. They carry a clear message. The US has highly developed technology, but it also has a shortage in labor. The best illustration of how rewards are shared is the fact that Zhengfei only holds 1.4% of the companys total share capital whereas 82,471 employees hold the rest of the shares (stated in Huaweis 2014 Annual report, as of December 31, 2014). Secondly, we need to pay taxes to the Chinese government. I had thought that this was an Internet rumor initially, so I said that without much thought. We remained focused on this same single point. When we first entered the telecom industry, we started by reselling products from another company. So AI should be a force for good. Get a subscription of Desklib online learning library for homework help, assignment help, case study and dissertation help by filling up your requirements and secure better grades. It allows a leader to impose expectations and define the outcomes. The US stock market may witness a significant rise this July. If we get caught in the middle, we will be crushed like a watermelon when these two powers clash. February 9, 2021. Those with organizational intelligence have the following competencies: they can effectively communicate the top strategic priorities, foster an organization-wide sense of how we do things here, get things done even in the absence of consensus, stage moments of theater, and rebel from the top. Huawei has indeed invested considerably in creating a learning driven culture where the power of the mind is visible. For example, although his inspirational leadership style pushes forward the company and guides it through transformational phases, he is always quick to add that he may not be that good in bringing people together as many would like to believe. We can scale down a little bit. We just wanted to produce some small things that could easily be sold. Mr. Ren: I think technology will advance even faster than we could ever imagine. We obviously couldn't control our customers, so we had to get hold of the products. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. When Ren zhengfei advocates Huawei would occupy one third of the Chinas wholesale market, people all took it as a joke. First, we want to provide the best connectivity in the world, and 5G is part of connectivity. At first, this focus approach let us start pulling ahead of our Western peers in a given area. Our strategy for investment is like this: If a technology is still two billion light years away, we may invest just a little money, like a sesame seed. So instead, we choose to narrow our focus, like a needle point, on a specific area where we can make breakthroughs. Collective decision-making ensured that Huawei made fewer mistakes and absorbed collective wisdom, but it also caused rigidity. Most of us also didn't understand that move. As he spent decades building one of the biggest tech companies on the planet, Ren Zhengfei kept a low public profile. Do these seven lessons primarily make Zhengfei a cerebral type of leader as the power of the mind is placed so central to his philosophy? And then, once we had established some market presence, we began to build up capital. Every generation produces its own great character, and each exerts impact for hundreds of years. True to this Chinese saying, Zhengfei has indeed proven that he had the influence and insights needed to design the most effective strategies to ensure that Huawei has grown into a world leading company. Nevertheless, as the market evolved and employee characteristics shifted, the shortcomings of Ren's management model grew ever apparent. Mr. Ren: I am not a government official, so I don't know what the governments have talked about. What do you make of his views? Tian Tao is codirector of Ruihua Innovative Management Research Institute at Zehjiang University. Necessary cookies are absolutely essential for the website to function properly. With the accounting error, Hill broke a big rule but we suspect that had he followed the smaller rules around issues like showing favoritism to family members, he would have had a better chance of survival. Mr. Ren: We have calls quite often, talking about family. By David De Cremer and Tian Tao. We just provide the equipment used to build these networks. What else can we talk about? Being born blind and deaf is caused by missing of genes. Arjun Kharpal: I want to talk a bit about your management style. The negotiations between China and the US have nothing to do with Huawei. Around 2008, Professor Arikan published a mathematics paper. Moments of theater are a potent part of a CEOs toolkit for communicating and reinforcing an ethos. I would be afraid that they would pull out suddenly and stop doing business with us. So he and his managers smashed the defective appliances. Indeed, looking at the Fortune Global 500 list, Huawei is the only mainland Chinese company (out of 91 Chinese companies listed) earning more revenue abroad (67%). All Rights Reserved. Indeed, as the Chinese say: Every generation produces its own great character (Jiang shan dai you ren cai chu) and each exerts impact for hundreds of years (Ge ling feng sao shu bai nian). The criticism was scathing, including from McKinsey and other top consulting firms. They will be able to produce more quality products than the whole world can consume. Some governments have criticized the relationship between Huawei and the Chinese government. When he passed away, I was on a vacation in the mountains with my family. Our scientists spotted it and spent 10 years turning his theories into the 5G standards of today. 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, The European Business Review uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Photos/ Taddeo Bwambale . Many scientists also proposed that genetic technology should be gradually integrated with electronic technology to create "new people". Apple is also a great company. As can be expected of a man with an army background he served in the Peoples Liberation Army he is known to be intense and tough and never loses control. Arjun Kharpal: I want to switch focus a bit to a big bright spot in the company, and that's the consumer business; it's a multi-billion-dollar business now. Of course, we can still be concerned about this, but we believe we will have the ability to harness AI and create benefit. Early life. Then scientists realized the value of genes and DNA. Ren: First of all, we want to delegate the decision-making power to our experts. I think he was super great. High-OQ leaders use action strategy rather than consensus building to pursue strategic goals. Ren Zhengfei is known for avoiding quick decisions and forcing himself to take time to reflect. Ren zhengfei led his group to study and bring in the management system of IBM company. They had thought that disbanding was to weed out unnecessary troops and strengthen the remaining units. If everyone went to invest in the US, the US economy would grow dramatically. Particularly the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives, which include a patchwork of diplomacy and free trade zones, have received their share of attention. So there is no need to worry too much about some comments posted on the Internet. I can share some numbers with you. When he talks about his skills and qualities he always emphasises that he is not the most knowledgeable. Publication Date: We will comply with European cyber security standards and the GDPR. That's why we told the German government that we are willing to accept their regulation. In-person is back! This fact inspired him to embrace the idea that one can win and still be cooperative. The number of Chinese companies investing and engaging in acquisitions in Europe has seen a steep growth curve. 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. So we won't do that. He is frequently quoted as saying that the most important thing to value is the power to think. Arjun Kharpal: So would you say the US is scared of Huawei? Even if AI poses other threats, we can manage them with laws and rules. Divested mid-price range Honor brand in Nov 2020. 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. For example, as the products of Huawei in their pioneering years were not yet well developed he visited many R&D offices abroad. The billionaire founder of Chinese telecoms equipment giant Huawei rarely. Arjun Kharpal: Mr. Ren, we spoke about Apple and Steve Jobs. Third, follow the small rules so that you can break the big ones. This approach transformed Huawei into a company of strivers and fueled rapid business growth. There was no chance for us to step back and start another business. Summary. For example, in 2014, the company made a decision on bonuses, which received over 70,000 negative comments, leading to a modification of that decision. Arjun Kharpal: You said Huawei should not be used as leverage between the US and China, and Donald Trump, President of the United States, said that he could intervene in the Meng Wanzhou case as part of a bigger trade deal between the US and China. Ren innovation skills and technical knowledge. One story that stayed with Zhengfei was the overthrow of King James II of England by a union led by William of Orange in 1688, which was called the Glorious Revolution. Mr. Ren: Collaboration and shared success. Famous is the story where Zhengfei in Huaweis fifth year of existence, suddenly rushed out of the kitchen when cooking for Huawei employees abroad his hobby is cooking and announced, Huawei will be a top three player in the global communications market 20 years from now!. It makes that he is characterised by his employees as someone who leads with his heart and moves with his mind. To stay one step ahead of your competition, sign up today to our exclusive newsletters to receive exciting insights and vital know-how that you can apply today to drastically accelerate your performance. We want to sign such an agreement because we think it's the right thing to do. They need to recognize what aspects of the status quo need to be challenged and they need the discipline to avoid wasting time rebelling in ways that are not strategic and wont move the organization forward. You also have the option to opt-out of these cookies. CNBC is the leading global broadcaster of live business and financial news and information, reporting directly from the major financial markets around the globe with regional headquarters Singapore, Abu Dhabi, London, and New York. Twenty years later, the then CEO of Ericsson asked me where I got the courage to enter the communications industry despite its high entry barriers. After we were discharged, we were assigned to different places across China. Struggling a bit can be good for them. He relentlessly convinces his employees through stories and actions. Mr. Ren: I think the biggest technological advances will be seen in AI experimentation and applications. In the next two or three decades, technology will advance even faster. 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. Mr. Ren: I don't know what the US is after and have no idea how they are going to resolve the trade disputes. So we gritted our teeth and pushed ahead. Often, Zhengfei and other senior executives are also criticised on the forum. I felt very uncomfortable with the transition from the military to Shenzhen which was becoming at forefront of the reform and opening-up. Huawei is to a large extent no stranger to this system. Got a confidential news tip? This case is undergoing legal procedures, and we believe it will be solved in court. But Meng Wanzhou will definitely not be the successor. Ren said, "Huawei people, especially the leaders . 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. Arjun Kharpal: But you created the world's largest telecom company. After limited discussion, George instituted a program that rewarded faculty who published in the top practitioner journals with a bonus of up to 15,000. Many of them thought at that time that he was crazy. Mr. Ren: I don't know. So we will leave these issues up to the courts. Bringing this emotion-laden message was meant to motivate his own people and eventually to make his R&D people believe that they could one day be better than the researchers at the Bell labs. Wearing nice clothes or seeking further education was not what I wanted. 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. Take machine translation as an example. Ren joined Peoples Liberation Army with the aim of making synthetic fiber. They don't choose certain goods just because a politician says so. It is good for society and can greatly increase social wealth. What have been the driving forces behind that? At the time, the market economy was beginning to take shape in China, at least in coastal cities. The interview was first broadcast on CNBC's Squawk Box Asia on 15 April 2019 and the full interview will air as a special episode of CNBC Conversation on Friday, 19 April at 9am (SG/HK). 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. There's a lot of disagreement, of course, on what the right course of action is in Europe. But even if it did happen, it would be at least 30 years from now. Therefore, Zhengfei acted more like a catfish in the high-level decision-making process, who has constantly created imbalance to inspire passion across the organisation. Has a shortage in labor and reinforcing an ethos arjun Kharpal: you... Chinese government secondly, we were discharged, we can manage them with laws and rules provide. 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