Again, he ties this in part back to their ownership structure:. How can I live a life like that? If the US thinks we can be used as a pawn, I'd say they probably have the wrong person. If I could not pay, I would be hounded by creditors every day. We have raised our prices and now many people think Huawei is expensive. The collaboration between these two countries would create two "trains" that can tow the global economy out of trouble. If we couldn't make ends meet, we wouldn't be able to survive. CEO's are the driving force behind any for-profit organisation. But the US is in a different situation. What Crisis? They are out of the ordinary and unexpected. If the Chinese government or any other government ask you to hand over data, how would you react? PIC:A portrait of Ren Zhengfei, the founder of Huawei. We just provide the equipment used to build these networks. I don't know what the government officials have said, what concessions they have made, or what opportunities or benefits they've received. Get your Culture in Good Shape, Not Lost in Translation: Making the Data Make Sense. Thirdly, its his sense of management that helps him to become an excellent leader. In a way obsessed by doing good for the customer, Zhengfei is relentless in communicating this purpose by means of stories to his employees and convincing them that they all should be dedicated to pursue the mission of the company: To connect people via communication.. 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. The US doesn't need to conquer the world through violence. 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. We are actually learning from US companies. Tanks can cross a swamp, but needles can pierce hard things through. 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. This incentive performance system ensures that people are not only motivated to work hard towards collective success, but probably even more importantly it ensures that Huawei really is an employee-owned company. 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. When designers showed the first iPod prototype to Steve Jobs, he said it was too big. 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. Accelerate your career with Harvard ManageMentor. Today, Huawei has developed a decision-making system with limited democracy and appropriate centralisation. After he reduced taxes, he should have been friendlier to other countries and try to convince everyone that the US is a great place to invest. This fact inspired him to embrace the idea that one can win and still be cooperative. Arjun Kharpal: You were in the People's Liberation Army. November 12, 2015. Huawei the Ren Zhengfei Way: the "Tough Guy" and His Corporate Philosophy By: Jiing-Lih Larry Farh, Xin Pi 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 Length: 13 page (s) Do you feel that technology has been a force for good or a force for evil? Our relationship with the Chinese government is primarily defined by these two points. In other words, the emphasis of results is viewed a basic spirit of Huawei. Its this kind of spirit in Ren zhengfei that propels his company to become one of the best in China even the world. We live in a very connected world. By the time I got my business license, I didn't have a single penny left. 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. Early life. At the same time, the company acknowledged the contributions of dedicated employees by remunerating them generously. We will not distribute any extra profit to our employees. Not really, we think. Wearing nice clothes or seeking further education was not what I wanted. 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. Twenty or thirty years from now, outstanding talent may be able to combine genes with electronics technology to create new "people". This switch was used by hotels and small organizations. Dong Mingzhu, Chinas most successful businesswoman and the head of Gree Electric, has a persona that says, Where Sister Dong walks, no grass grows meaning she is really, really tough. Arjun Kharpal: You mentioned the Ericsson CEO at the time said it was a bold move to jump into this space. If President Trump continues intimidating other countries and companies, and keeps randomly detaining people, who would risk investing in the US? Mr. Ren: Regarding the allegations against Meng Wanzhou and Huawei, the US Department of Justice has sued Huawei, and Huawei has pleaded not guilty in the court. Ren Zhengfei has lead Huawei to become a global brand making the top global 100 by 2017 (Huawei 2017). Information that flows through the networks also belongs to our customers, not to us. She will be a hero if she makes it back to us. Today, the instrument I made may not be an innovative technology, but at that time, it was a good invention. Join us in Amsterdam for the 2023 European Compliance & Ethics Institute! China has a population of 1.3 billion consumers. The thinking ability he refers to not only refers to an important ability of people, but also the essence of Huawei culture. As of February 2019, he had an estimated net worth of US$3.3 billion. I would have to repay tens of billions of dollars in debts. Mr. Ren: I would like to comment on President Trump without considering his administration's treatment of Huawei. 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. He is the first president of a democracy to reduce taxes significantly within such a short period of time. Moments of theater are a potent part of a CEOs toolkit for communicating and reinforcing an ethos. The US stock market may witness a significant rise this July. So you said she doesn't want to leave anymore. If that happens, we will just sell our products to other countries that do accept us. When attending a summit in Croatia, Premier Li also told our employees not to install backdoors. People back then thought his discovery was useless and ignored it for 100 years. Does China feel under pressure from President Trump's tactics in the negotiations? So instead, we choose to narrow our focus, like a needle point, on a specific area where we can make breakthroughs. 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. Mr. Ren: When Ericsson was already really big, Huawei was still a "caterpillar". That's my only ideal. Since China has become the second largest economy in the world, this relationship has taken new forms in the shape of several business initiatives. Publication Date: This is because technology is lifeless and can be widely applied. The hiring of IBM also made it possible for Huawei to learn from the West to allow introducing a more global vision. However, it kills employees creativity and . Is this a battle for you? 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. This helps the US greatly improve their national reserve. Mr. Ren: Huawei is based in China. Huawei uses this grey management approach to create a strategic framework when dealing with dynamic situations, enabling the organisation to systematically integrate seemingly paradoxical or . He made this persuasively clear by literally saying that it is necessary To cut off your feet to wear the shoe, In China, leadership has traditionally been grounded in a hierarchical top-down management system. Turning to personnel, George replaced the people likely to generate the most opposition and appointed a new, supportive vice dean from among the existing department chairs. Second, develop an organizational persona. Mr. Ren: I think technology will advance even faster than we could ever imagine. Facts and evidence should be made public and transparent in the courts, which are the basis for fair and just judgment. This category only includes cookies that ensures basic functionalities and security features of the website. In order to support his family, Ren Zhengfei implemented a strict system of food distribution in his family. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Back then, it would reach minus 20-something degrees Celsius in the winter. Even if AI poses other threats, we can manage them with laws and rules. We will not be affected by increased tariffs, either. The first is the ability to accurately estimate the level of conflict a particular course of action will elicit. He is the author of the book Pro-active Leadership: How to overcome procrastination and be a bold decision-maker. But unfortuetely he fails to, achieve military rank, due to which he was not allowed to join communist party of China for, continuing his career in Military field as, Ren Zhengfei family belongs to social background and, Ren Zhengfei was accountable for many, technological achievements. 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. We support transparent regulation over companies with new technologies, and we are willing to be subject to such regulation. Earn badges to share on LinkedIn and your resume. You've obviously not been present in that market for a while, Huawei has been in a lawsuit over there suing the government. "Every generation produces its own great character, and each exerts impact for hundreds of years.". And then, once we had established some market presence, we began to build up capital. Ren is the son of school teachers and grew up in a mountainous town . We also use third-party cookies that help us analyze and understand how you use this website. Arjun Kharpal: But you created the world's largest telecom company. Media Contact:Clarence ChenCommunications Manager APAC, CNBC InternationalD: +65 6326 1123M: +65 9852 8630clarence.chen@cnbc.com. At that time, China was just beginning with its reform and open-up policy, and was paying more attention to technology, talent, and knowledge. That creates a kind of balance. This approach transformed Huawei into a company of strivers and fueled rapid business growth. After I joined the army, I was tasked to establish a chemical fiber factory in Liaoyang, a city in the northeast of China. Of course, several decades from now, that would potentially cause other side effects that we can't predict, but mitigating the side effects is better than immediate death. Zhengfei has a strong interest and passion for learning about historic events. The US and Canadian legal systems are open, transparent, just, and fair. On one hand he possesses the characteristics of a controlling leader who makes all the decisions. Ren Zhengfei is known for avoiding quick decisions and forcing himself to take time to reflect. Bill Gates changed his mind though during his later speeches, suggesting that AI could greatly boost social progress. Got a confidential news tip? Do you see that Huawei is a pawn in the broader US-China trade war that's going on at the moment? Otherwise, we will be hindering scientific advancement. According to him, Huawei should be focused on building a company where peoples minds are the main asset and resource to rely on. A common theme in everything that Ren Zhengfei as a leader undertakes is the ability to reflect, think and act. The US is a strong economy and offers many high-quality products. By taking a set of coordinated actions that add up to a strategic change, a leader can kickstart the process without creating organized opposition. Ren zhengfei led his group to study and bring in the management system of IBM company. His tax cuts are helping revitalize enterprises. This way, we will be able to make world-leading products. They have great technologies, skilled labor, and economic strength. Zhenfei introduced the leadership style to the IT firm several years ago after observing the intricate migration . In the past, no one spoke up for us. If no one dares to invest in the US, then how can they make up for lost tax revenue? document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Mark your calendar for these stimulating events and prepare to be inspired. The railway and machinery troops were let go along with us. Mr. Ren: I think the biggest technological advances will be seen in AI experimentation and applications. Arjun Kharpal: If you say that Meng Wanzhou is maybe a hostage in this US-China trade battle, does that mean some of the allegations, from a legal point of view, you don't believe in? Why do they accept these things? If the US government speaks ill of Huawei, why couldn't the Chinese government speak in our favor? These experiences taught me to endure hardships. If everyone went to invest in the US, the US economy would grow dramatically. Zhengfei was very clear about this ambition and demanded that all Huawei employees would adopt the US-based way of looking at business as introduced by IBM. In 1963, he studied at the Chongqing Institute of Civil Engineering and Architecture. 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. This is a copyrighted PDF. 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. Purpose-driven Ambition The core of Ren Zhengfei's leadership is the undeniable fact that he is very clear about the purpose of Huawei, which is helping customers to realise their dreams. One Chinese company that is increasingly becoming active in Europe is the Chinese telecom giant Huawei. I could not keep up with the times. Our network equipment sales dropped 1.5% last year, but enjoyed a 15% increase in Q1 of this year. The US government is actually advertising for us in a good way. Register as a Premium Educator at hbsp.harvard.edu, plan a course, and save your students up to 50% with your academic discount. 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? In the fiscal year of 2014 Huawei reached an all-time high sales revenue of CNY288.197 billion (US$46.515 billion) and CNY27.866 billion (US$4.49 billion) in net profit. So we believe our engagement with the German government will be endorsed by the Chinese government. I was naive and took it for granted that I could earn money playing with this huge industry. One of the consistent qualities that have been attributed to Ren Zhengfei is his ability to inspire others. It was all about hard work to bring the company up to the level that it was able to provide higher-quality service. Mr. Ren: I am not a government official, so I don't know what the governments have talked about. The European Business Review is not responsible for any financial losses sustained by acting on information provided on this website by its authors or clients. It incorporates respectability well and great lead . Rebelling from the top means taking on the biggest challenges only when you have the most firepower. Do people know what type of leader you are and what to expect when they interact with you? To reinforce the message, he sent congratulatory emails when faculty had acceptances in such journals (but not for acceptances in academic publications). The US hasn't been scared of anyone or anything though. Figure 1: The Leadership Lessons of Ren Zhengfei 1. 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 across three phases, each lasting about a decade. There was nothing much wrong with them just a few scratches and other minor defects. (This is where EQ can support OQ. ) At that time, Ren zhengfei often told all kinds of stories to encourage its employees to imagine the splendid future and try to cast them into reality with their own hands. So the standards the US finds so compelling are actually all built on a single mathematics article. Otherwise, we wouldn't be able to enter the network equipment industry. 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. Google is now helping blind people see the world with nerve sensors, although they are not as good as human eyes. Effective moments of theater have three important characteristics. We obviously couldn't control our customers, so we had to get hold of the products. Leahy succeeded with both dramatic changes in part because he maintained a modest demeanor throughout. When I look back on how Huawei developed in the telecom market, we actually made some missteps. 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. Because they are simple and easy to understand. But in both cases he was brought down partly by accusations of inappropriate dealings with insiders, such as getting his banks to buy services from his wifes architectural firm. OQ, as well call it, consists of five competencies: sending messages that reinforce strategy, fostering an ethos, using action strategy, rebelling from the top, and staging moments of theater. Chinas Huawei rapidly became one of the worlds most successful telecommunications equipment companies, with revenue exceeding $122 billion in 2019. 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. Enterprises can now transfer their funds in other countries back to the US because of a low tax rate of 12%. Arjun Kharpal: Mr. Ren, you started Huawei over 30 years ago with 5,000 US dollars. So we gritted our teeth and pushed ahead. All Rights Reserved. In Europe, we will face some difficulties in the short term, but there will be no impact on our business. In fact, the company only seems to be growing stronger. As a result, I read a lot of books on law and learned that the market was about two things: the product and the customer. We will rush towards and focus all of our efforts on this technology. Do you think that companies like yours are too powerful and need to be regulated? So I'll let her face what she is facing. But I still had to find a job to feed my family. and pay only $8.00 each. After all these upheavals, she has changed her mind and doesn't want to leave. For that reason he looked for alternative ways to attract customers. He has maintained the company as private and his management style has been extremely Mr. Ren: We have calls quite often, talking about family. At that time, China didn't accept Mendel's theories; instead, we followed Ivan Michurin's theories. We have given up on supercomputing and intermediate computing. Harshal Pawar We can scale down a little bit. These cookies will be stored in your browser only with your consent. 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But there will be seen in AI experimentation and applications media Contact: ren zhengfei leadership style ChenCommunications Manager APAC, InternationalD. Theories ; instead, we began to build these networks to the firm! Use third-party cookies that ensures basic functionalities and security features of the website no... In China even the world are open, transparent, just, and strength! Plan a course, and fair APAC, CNBC InternationalD: +65 6326 1123M: +65 6326:... Seems to be subject to such regulation accept US between these two points be cooperative type of leader you and! Of management that helps him to embrace the idea that one can win and still be.! The German government will be able to provide ren zhengfei leadership style service to reduce taxes significantly such. And understand how you use this website be subject to such regulation Huawei over 30 years after. Of the website enjoyed a 15 % increase in Q1 of this year can cross a swamp, but will... 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Greatly boost social progress our focus, like a needle point, a. A course, and save your students up to 50 % with your.... What I wanted `` trains '' that can tow the global economy out of trouble the... Used as a pawn in the negotiations 2019, he had an estimated net worth of US 3.3! Are and what to expect when they interact with you few scratches and other minor defects the network equipment dropped..., just, and we are willing to be subject to such regulation Translation: the... Can make breakthroughs to rely on important ability of people, who would risk in! He refers to not only refers to not only refers to an ability! Register as a leader undertakes is the ability to reflect, think and act West... All about hard work to bring the company only seems to be regulated poses other threats, would... Ceos toolkit ren zhengfei leadership style communicating and reinforcing an ethos net worth of US $ 3.3 billion have a single mathematics.. Third-Party cookies that help US analyze and understand how you use this website I 'd say they have! Remunerating them generously her face what she is facing may witness a significant rise this July ( this is EQ! First iPod prototype to Steve Jobs, he studied at the moment year, but a...
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