Why Focus-Based Leadership is Important to Huawei’s Business Strategy

By David De Cremer and Jess Zhang

Contemporary business develops at a rapid pace, with many uncertainties, internationally connected stakeholders, and little latitude to make mistakes. In such a dynamic environment companies need strong leadership to survive and build a long-term and sustainable reputation. But what does strong leadership mean?

Looking at companies with a clearly visible and strong leader present, the ability to focus and pursue this focus with a strong determination seems to be a crucial element. Steve Jobs, the late CEO of Apple, was known as a man who never lost sight of the ultimate goal. His reputation of setting priorities in almost any aspect of life is vividly remembered by those who worked together with him to make Apple the primary brand. Steve Jobs truly believed that a lack of focus can drag you down or at best will make you mediocre.

The main reason given why being a focused executor makes for great leadership is because in the minds of people it makes you a wise leader. In a 2011 Harvard Business Review article, Ikujiro and Hirotaka Takeuchi argued that in a world with an ever increasing pace of change, business leaders struggle to reinvent their corporations rapidly enough to cope with new technologies. As a result, many companies fail in their leadership to develop truly global organisations that operate effortlessly across borders. The reason for this failure is that most business leaders are all over the place and as such lack focus in what makes their company great. And, it is exactly this kind of leadership that is regarded as wise leadership. If we take the example of Steve Jobs again then we can see that in addition to being very focused on a few priorities he has been named one the smartest leaders around. It is as if he was able to predict what was needed in an ever changing world – a mystic idea that is covered by the concept of wisdom.

Recent business trends in the management area are pointing out that focus-based leadership may well represent the type of wise leadership contemporary business is crying out for. In fact, a key characteristic of wise leaders is that they are able to grasp the essence of things and decide what to do. As Ben Stein, an American writer, so nicely puts it: “The indispensable first step to getting the things you want out of life is this: decide what you want.” This advice is also applicable to many business leaders as their crucial role should indeed be to devote their energy as a leader to reminding their organisation what they are about and what goals they ultimately should strive for. If they can do this then their presence will be felt and allow directing the attention of their employees on the innovative outcomes that need to be created.

A company that has made the concept of focus with a strong sense of determination a defining feature of their business strategies and leadership is the Chinese telecom giant Huawei founded by Ren Zhengfei in 1987 in Shenzhen. Since Huawei became the world leader in the telecommunication industry when it surpassed Ericsson in terms of sales revenue and net profit in 2012 they emerged as the world leader in the telecom industry. They employ more than 40,000 non-Chinese employees (out of 170,000) and are the only Chinese company that receives more sales revenue from markets outside (67%) than from inside China, making them truly a Chinese global company. Drawing from a combination of Chinese roots and Western perspectives, Huawei considers focus based leadership as their main driver for the innovative products they put on the market.

The recent marketing campaign, which was launched early February 2016, at the international airports of Barcelona and London, is testimony to the focus based leadership strategy as Huawei’s main driver for the innovative products they put on the market.

The recent marketing campaign, which was launched early February 2016, at the international airports of Barcelona and London, is testimony to this focus (see picture above for a picture of London airport). In this campaign that is targeted at decision makers, policy makers and opinion leaders, and which features in many international newspapers, magazines and airports, Huawei aims to present their business philosophy including the perspective of focused and wise leadership. In fact, the importance of setting priorities can clearly be identified as one of the main drivers of their philosophy. Take a look at one of the pictures used in this campaign of a Wagenia man fishing in the Congo River and maintaining a sharp focus to avoid being swept away himself.

This picture symbolises what the founder of Huawei, Ren Zhengfei, thinks about the way Huawei does business. In China, Ren Zhengfei is regarded as the example of what wise leadership constitutes. The reason this is, is that for him, doing business is a case of survival, of trying time and time again to get the best out of yourself and staying humble at the same time. As a case in point, in 1999, Ren Zhengfei visited the Voortrekker Monument in Johannesburg, which honors the Dutch immigrants who spent 19 years moving from Cape Colony to the continent’s interior in the 19th century. After seeing how hard the lives of these Dutch immigrants had been, he thought of how hard Huawei had suffered during its first 10 years. Since then, in his speeches he has indeed consistently emphasised that Huawei must survive. 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.

This view on business as a continuous survival requires an attitude reflecting a focus on well-defined priorities and a strong sense of determination to pursue those priorities relentlessly. As Ren Zhengfei noted in 2015 when defining Huawei’s core business to seize strategic opportunities

“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.”

According to Ren Zhengfei, it is thus crucial to focus on one thing to ultimately become better. Known for being a company that tries to provide the best service possible to its customers, Huawei has always kept a strong focus on crucial and continuous investments in R&D to make their products better. Ren Zhengfei was never willing to compromise on this focus, which is quite exceptional given the fact that only in April 1988 at the National People’s Congress, China’s parliament approved that private companies were allowed to do business. This fact makes that in the eighties not too many telecom companies were around and growth profit for any company in this industry was very high by default. As money was so easy to make, most companies that were around at that time were not motivated to invest heavily in R&D. However, due to Ren Zhengfei’s conviction that you have to keep focusing on one thing to become very good at it, Huawei chose the style of focused based leadership as a strategy to start generating impact already in the early years of their existence. Indeed, they invested heavily in R&D as soon as financial resources were available. Over the past 10 years, Huawei has invested CNY240 billion in R&D and innovation and of their 170,000 employees, over 45% are involved in R&D. In addition, Huawei has 16 R&D Centers around the world, and 31 Joint Innovation Centers. Finally, as of June 30 2015, Huawei has accumulated a total of 41,903 patents. As a result, this type of wise leadership with a focus on R&D is now referred to as key in their emergence as a global leader in the massive data transmission. In fact, as articulated by Chen Lifang at Huawei’s 2015 Annual Media Salon, a clear focus is hailed within Huawei to have led to a moment of divine clarity in their sense of business purpose. Specifically he said that:

“The success of Huawei’s mobile phones is a case in point. You may have seen the rapid progress that we have made in this area over the past several years, especially this year. This success was not achieved overnight. In fact, Huawei has been doing business in communications for over 20 years and has been working on mobile phones for over 10 years. We have improved our capabilities in areas such as chips, software, materials, design, and processes. So, our success in mobile phones is not just down to chance; it is the fruit of years of effort.”

What makes Huawei’s belief in focus-based leadership so strong? The central idea in their philosophy to focus on one thing is that even if you are initially weak, a continuous, powerful focus can make you ultimately very strong. Ren Zhengfei often illustrates this point by referring to the ultimate strengths soft elements like water and air can generate. Indeed, he once said: “Water is soft, but Germany, for example, uses high-pressure water to cut steel plate. Air is also soft, but rocket engines can use that same air to propel a whole rocket.” Of course, a focus on one specific target and dimension makes that a conviction goes together with a strong sense of determination. The Chinese generation of entrepreneurs, like Ren Zhengfei, that stood up in the eighties, having experienced the cultural revolution, clearly do not lack this sense of determination.To persevere is a value that has been there since childhood. Ren Zhengfei was born in 1944 in South-West China’s Guizhou Province, which was one of the poorest regions in China, a childhood experience that taught him not to take anything for granted. He had 6 brothers and sisters and the circumstances made it difficult for a family of 9 to survive. Poverty, hunger – they even had to eat grass at one point – was part of his early memories and serves as the foundation of his displays of perseverance and dedication. The memory of this hardship is nowadays used by Huawei’s leadership to serve as a continuous reminder to be humble, self-reflective and determined to improve; a strength that is needed to lead to great moments of success.

The message is clear: As Warren Buffett once noted that staying humble helped him to stay focused on what really matters, Huawei has become the embodiment of the idea that hard work and determination need to go together with a focus on strategic priorities. Wasting too much energy on non-strategic pursuits only distracts and breeds puddles of diversity that will divert rather than guide.

About the Authors

David De Cremer is the KPMG professor of management studies at the Judge Business School, University of Cambridge, UK, and a fellow of the Ruihua Innovative Management Research Institute at Zhejiang University, China. He has been named as one of the 2016 America’s Top Thought Leaders in Trust and the most influential economist in the Netherlands (2009-2010). He is the author of the book Pro-active Leadership: How to overcome procrastination and be a bold decision-maker.

Jess Zhang is an associate researcher at Judge Business School, University of Cambridge (UK) and a former Associate Director of Corporate Relations (Asia) at HULT International Business School and formerly the Centre Manager of Centre on China Innovation at China Europe International Business School (CEIBS). Email: [email protected]