Openness Is a Way of Thinking
In 1954, Albert Einstein pessimistically predicted: “The unleashed power of the atom has changed everything save our modes of thinking, and thus we drift toward unparalleled catastrophe.” In retrospect, his prediction has been partially right. Over the past 60 years, the human world has gone through quite a few major crises, including two financial crises trig- gered by the United States. Yet we have survived. Why? Because we have changed our way of thinking. Einstein had not predicted that our way of thinking may change according to external circumstances, and we are always able to detect opportunities even in a crisis-stricken world. That gives us the capacity to always move forward.
Huawei has grown by leaps and bounds in the past two decades because it has an open mind to embrace changes. On the other hand, some large and established companies have clung to their glorious tradi- tion and behaved in a fixed, proud, and conceited manner. They don’t care about change. As a result, they have been overtaken by new startups, such as Google, Apple, and Huawei, who do not have a long history or tradition. A company may be underprivileged if it has no root in tradition, but this lack of tradition may turn out an advantage in an age when exter- nal changes outpace internal reforming efforts. Free from any restraint, it can easily break away from old rules and participate in the formulation of new rules. With an open mind, Huawei has developed a unique culture that combines both Western and Eastern characteristics. This is a secret to its rapid growth.
Ren Zhengfei is also an open business thinker who embraces the West and the East, the modern and the traditional. He has developed great insights through learning. When he watched a TV series, The Qin Empire, Ren Zhengfei was deeply impressed by Shang Yang, one of the most tragic reformers in the history of China. He was awestruck but also felt regret- ful. He believed that Shang Yang had followed the right direction, but his approaches to reform had been too radical. Radical reforms often come with a dear cost.
Among foreign politicians, Ren appreciates Yitzhak Rabin the most, and claims that he is a student of the former prime minister of Israel. On the other hand, Ren regards Ariel Sharon as a short-sighted politi- cian with his hawkish diplomacy. Ren Zhengfei believes that the policy of giving “land for peace” proves the wisdom and vision of Yitzhak Rabin,
and the thinking behind it has become a principle for corporate gover- nance at Huawei.
In 2009, Ren Zhengfei told the story of the Last Supper at the Pentagon. Then he said,
Now the financial crisis is roiling the market, and the future is unknown. But I don’t want our boat to sink. Now that we have chosen to ride on just one boat, we have to stick to our direction and row the boat hard enough. The Last Supper at the Pentagon refers to a famous dinner offered by the then Deputy Secretary of Defense William Perry to the bosses of arms sup- pliers in 1993. During the dinner, William Perry warned his guests that the budget was going to shrink and consolidation was essential for their survival. This dinner led to a rash of industry-wide mergers in the United States beginning in the mid-1990s. Of the 50 major weapon vendors in the 1980s, only 5 survived in 2002, including Boeing and Lockheed Martin, which are multisector conglomerates.
Ren Zhengfei has always been an excellent learner. Thirty years ago, he won the title of Model Learner of Chairman Mao’s Works, and the writings have certainly inspired him ever since. Some critics are saying that Huawei’s management philosophy has clear Maoist features. This is true, but it is totally wrong that Ren Zhengfei is running the company with the thoughts of Mao Zedong.
Among Chinese political leaders, Ren Zhengfei has the greatest respect for Deng Xiaoping. He has asserted many times that Deng Xiaoping is the greatest reformer in the history of China and that Deng’s ideological legacy consists of two key words: “Reform” and “open.” These words are precisely the recipe for Huawei’s success.
Since it was established, Huawei has defined itself as an open orga- nization. Ren Zhengfei strongly felt that Huawei would not survive as an enclosure. He said: “Openness is the basis for the company’s survival. If we do not open up, we will die. We must open up while we grow our core capabilities and develop partnerships. Anyway, Huawei must not sway, because to open up is our only choice.”
He also said:
Openness is one of Huawei’s core values, which has been the subject of some dispute. People doubted whether openness really matters to such an innova- tive company. As a result of our past success, the employees, and even the whole organization, have become very confident, proud, and self-conceited,
and they are shutting themselves up. So we have to open up and open up even further, and try to learn from others; this is a must for us to have self- renewing goals, examine ourselves critically, and develop a sense of urgency. He went on to say:
We must not force foreign employees to identify with the Chinese way. Perhaps we are not very clear about our own culture. In fact, Huawei’s culture is like an onion with many layers; one layer is the British culture, another layer is Chinese, and still another is American. So I believe ours is an open and inclusive culture. We’d rather not ask them to follow the Chinese way, but use their gift with an open mind to enrich our culture.
In 2001, someone proposed to set up a society of doctors; it was unequiv- ocally denied by Ren Zhengfei. He said that this would be a retrogressive organization, and the company should rather set up an Open Society.
Openness is an easy word, but it is a difficult goal. China’s road to openness over the past three decades has been bumpy. And the word was not even in Huawei’s dictionary for its first 10 years. The company had to manage to survive. It had to win enough contracts and market share, and the company had struggled like a pack of wolves, for which each was a hero and able to strike independently. This was the period of primitive accumulation, when survival was the most important task. The company had to grow up fast or get slaughtered in the market, where cut-throat competition had forced out more than 400 market players.
As Huawei grew larger, openness became a matter of life and death. The company was born as an underprivileged competitor: It was a pri- vate company without abundant capital, or a proud history or political background, and none of its founders had ever managed any other com- pany before they started at Huawei. Under this backdrop, Huawei had no choice but to open up, especially in the international market where a closed mindset would be a game ender.
Daniel Chamovitz has an interesting comment on plants, What a Plant Knows:
People have to realize that plants are complex organisms that live rich, sen- sual lives. But if we realize that all of plant biology arises from the evolu- tionary constriction of the “rootedness” that keep plants immobile, then we can start to appreciate the very sophisticated biology going on in leaves and flowers. If you think about it, rootedness is a huge evolutionary constraint.
It means that plants can’t escape a bad environment, can’t migrate in the search of food or a mate. So plants had to develop incredibly sensitive and complex sensory mechanisms that would let them survive in ever changing environments.
This paragraph fits in perfectly to explain why Huawei had to open up: It had to survive amid inherent constraints and the ever-changing environment.
Opening up Is a Forced Choice
Huawei has been closely scrutinized as it pushes forward into the global market, especially in the United States, where the company has been repeatedly “interrogated” by customers and even government officials.
A Chinese official once asked Ren Zhengfei: “Could you please share with other Chinese companies your experience in the international market?” Ren Zhengfei answered:
The key is to abide by laws. We must observe the laws of countries where we operate and the conventions of the United Nations. In particular, we’d better treat the domestic laws of the US as international laws, because the country is so powerful that its domestic laws have to be followed just about anywhere in the world. On the other hand, China’s legal system is not yet complete, and enforcement tends to be a bit arbitrary and randomized. As a result, solid governance and self-discipline are missing at some Chinese companies. They thought they could easily acclimate and succeed in the international market, but they would often end up in trouble instead.
Ren Zhengfei has often cautioned his colleagues in the managing board that Huawei must not live with the perceptions its competitors impose. Circumstances change, and the concern is that leaders’ minds become too static and nonaccepting of this fact. For the company not to be labeled as a “mysterious Black Widow” or a “brash gladiator,” it has to stay open in all spheres, and it should open up even wider although the company may believe it has always been; otherwise growth would not be possible. But if Huawei is still criticized as being “closed off” or “nonmainstream,” it is certainly because the company is not open enough. To illustrate his point, Ren Zhengfei provided an analogy: Imagine you are invited to a friend’s home. The host will loathe you if you kick off your shoes and scratch your toes in the living room. Huawei must not behave rudely like this.
We must prove with an even more open attitude that this is a company that plays by international rules.
In 2010, when examining what Huawei had done to achieve open- ness, Ren Zhengfei was both affirmative and critical. He said:
Any strong man is balanced. We can be extremely strong, but can we last if we have no friends? No. So why should we defeat everyone else and take the whole world in our hands? Genghis Khan and Adolf Hitler had wanted to conquer the world, but in the end they had perished before their goal was achieved. Huawei will surely fail if we attempt to do the same. Why shouldn’t we work with partners, especially strong ones? Our relationship with them should be a blend of competition and cooperation, and we should be satisfied if we enjoy some benefits.
He further commented:
When we work with others, we cannot act like a black widow. It is a spider one can find in Latin America known for its sexual cannibalism. After mating, the female spider eats its male partner in order to provide nutrition for their offspring. Huawei used to eat up or dump its partners one or two years after the partnership was formed. Now that we have grown stronger, we should not do the same. We must be more open, modest, and broad- minded. We must develop better partnerships to achieve mutual wins. Our R&D teams are quite open, but they need to open up further, both internally and externally.
Huawei has been growing fast. Some people may love it, while some others may hate it, because we may have robbed many smaller companies of their business. We need to change this situation; we need to create a win-win outcome through open partnerships. If we have turned many friends into enemies during the past 20 years, we will turn our enemies into our friends in the next 20 years. When the value chain is full of our friends, we will surely go from success to even bigger success.