3.1.1 Never Putting All Eggs in One Basket When Making Strategic Decisions
When we decide to move in a certain strategic direction, we need to invest strategically in an opposing direction to guard against potential risks and help to buy us some time if the strategic direction we choose turns out to be wrong. If we lack a clear direction amidst chaos, we must make balanced investments in multiple directions to guard against risks. Only when things become clearer can we dedicate a large team to the area we have selected. Despite this, we need to carefully study the areas in which we can seek international cooperation. We must not do everything on our own. Every company needs to focus on its area of expertise. (Ren Zhengfei: Speech at the Work Report of the Product Line Management Office, 2000)
When we make strategic decisions, we must not put all our eggs in one basket. It is too risky to select only one product for investment.
(Ren Zhengfei: Comments to Staff of the CDMA20001 Base Station Team, 2001)
No one knows how large data traffic will be in the future. In this era of massive data traffic, fixed networks will have an integral role to play. There will be plenty of market opportunities. Since we have set our strategic direction, we need to seize multiple opportunities to achieve our objectives. We cannot bet everything on a single opportunity. This is what small companies do, because they lack money to invest in anything else. Huawei is a large company with enough money, so we should dare to invest. To achieve our objectives, we can select multiple paths, develop multiple technical solutions, and move in multiple waves in our research and innovation. Similarly, in our core business, we can use multiple methods to row our boat. However, this doesn’t mean we will diversify our investments, or deviate from our core business. In such a rapidly changing world, we should never rely on chance. Companies that bet everything on a single opportunity may find it hard to succeed. If they choose the wrong strategic direction, they will suffer badly. (Ren Zhengfei: Speech at the Briefing on Industry Trends and Progress in Fixed Networks, Huawei Executive Office Speech No. [2015] 109)
3.1.2 Large Investment Along Multiple Paths in Multiple Waves
As long as there is sufficient demand in the market, we must seize the opportunities it brings. Since we don’t know what will happen in the market in the future, we need to compete on a wider front and must not give up easily. When things become clearer, we should immediately shift our investments to key areas. Therefore, I think we should be business or product-driven. Profitability is also important, but we must not be completely profit-driven. What we need are future opportunities. (Ren Zhengfei: Meeting Minutes of the R&D Management Committee, 2001)
We need to create a protection system to ensure the Blue Team
2 is in an important position within Huawei. The Blue Team may seem irrational at times. Some of its members have the courage to think, speak, and act out in ways we are not familiar with. We should show leniency towards them after their debates with the Red Team. It’s very likely that they can create a unique way forward. I can think of two examples of defensive lines that failed to live up to their purposes. One was the Maginot Line built by the French to protect France against Germany. The German army didn’t attack the line directly, but instead attacked France through Belgium, making the Maginot Line useless. The other was the defensive line of 17 fortresses built by Japan in northeast China. This was designed to prevent the Soviet Union from attacking Manchuria, but the Japanese didn’t realize that the Soviet Union would traverse the Greater Khingan Range instead. Unexpectedly, the Soviet troops had passed through the mountains and bypassed the Japanese fortresses. I think offense is more important than defense, and this means we need to value the role of the Blue Team. The Blue Team must try its best to challenge the Red Team. Even if it fails, it has to try. The success of the Three Gorges Dam would have been impossible without opposing voices. Although their role was not recognized explicitly, the design of the dam was revised based on their opinions. We must recognize the value and role of those with different ideas and welcome their input.
(Ren Zhengfei: The Best Defense Is a Good Offense—Remarks at a Briefing on the Wireless Network Business, Huawei Executive Office Speech No. [2013] 232)
Greater leaders are made through practice, rather than by thinking. We need to get everyone involved in real operations. For some enterprises that emphasize scale and service, both market demand and development space are limited. Due to commoditized competition, other companies can edge in to grab market shares, and shrink that development space. However, the telecom industry is rapidly growing and it is a place where real strengths count. If you cannot deliver something advanced, and if you have no forward-looking strategy, you will quickly collapse. Many companies similar to Huawei have collapsed. Huawei is not a public company, so our top management develops strategies with an eye on the next five to ten years, without worrying about short-term gains. Therefore, we move faster than others and are more forward-looking. To make breakthroughs, we must have strategic patience. If we cannot make breakthroughs within 10–20 years, or even within our own lifetimes, we would be left in a secondary position. We are not currently betting on any particular technology or direction. Betting on a single business opportunity is something small companies do, because they don’t have enough money to invest in multiple areas. Large companies have sufficient funds to advance in their core business along multiple paths in multiple waves, and can be investment-intensive to reduce the time needed to explore the direction. Of the multiple opportunities we explore, some might become major industry trends. We can then focus more on these opportunities and less on others. That being said, we don’t need to close the door on other opportunities. We can transfer experienced managers to major fields while deploying new managers in minor fields so that they can continue to push forward. This will give us multiple perspectives. Reflecting on failures will also be helpful. Having multiple perspectives will enable us to climb to the top. In order to win battles, the US military doesn’t calculate how much ammunition it uses. Some people think they waste ammunition, but in fact they are concentrating energy to advance. We also have a mechanism in place to attract talent. When our 150,000 employees work towards the same goal, we can only succeed. (Source: A Chat in the Garden with Huawei Founder Ren Zhengfei, Huawei Executive Office Speech No. [2015] 098)
For research and verification of uncertainties, we advocate multiple waves of exploration along multiple paths, with large and focused investment when things become clearer. The Blue Team should also have their physical organization. In addition, we don’t make assessments based on success or failure. We must extract success factors from failed projects, affirm achievements, praise those who deserve it, and encourage ongoing exploration. The word “failure” is not in the vocabulary of Huawei explorers. (Ren Zhengfei: Dedicated to China’s Century-old Dream of Revitalizing Science and Technology, Huawei Executive Office Speech No. [2016] 067)
The word “failure” is not in the vocabulary of Huawei explorers. When monkeys lived in trees, there were no paths on earth. After they evolved into human beings, they walked and left behind small zigzagging paths. Numerous explorers made the world a place with countless crisscrossing paths. No one can ever walk the entire length and breadth of the world. Those who manage to cover just one section of a long path are heroes. A total of 3.5 million ships sank along the sea route from Europe to Asia. Those who sank along with the ships were heroes of globalization. Flawed heroes are still heroes. This idea inspires people to continuously explore and make sacrifices for science. If people who have “failed” remain in our team with their experiences, we will become more mature. We should understand geniuses who might seem eccentric, and allow “black swans” to fly out of our coffee cups. We will either succeed or fail in innovation. We should boldly embrace “disruptive” ideas. Broken from the outside, eggs will be fried. Broken from the inside, peacocks will emerge. (Ren Zhengfei: Dedicated to China’s Century-old Dream of Revitalizing Science and Technology, Huawei Executive Office Speech No. [2016] 067)
There are also heroes in failed projects. We must be open-minded to accommodate more talent, and explore the future along multiple paths. Certain paths might fail, but they may well produce great people, or heroes. Flawed heroes are still heroes. We should be good at extracting success factors from failed projects. In this sense, failure will also mean success. In areas of certainty, we can assess if a person is a hero purely by the outcome he or she delivers. But in areas of uncertainty, there are heroes in failed projects as well, as long as they are good at summarizing what they’ve done right and what they haven’t. Therefore, when assessing a person, don’t jump to conclusions. Disruption is often performed by outsiders, who rarely follow the same logic as the insiders. Take old China as an example. It was two doctors, Sun Yat-sen
3 and Lu Xun,
4 who brought disruptive changes to the country.
(Ren Zhengfei: Scale New Heights and Forge Ahead into Uncharted Territory Along Multiple Paths in Multiple Waves—Key Messages of Discussions at Mobile World Congress and in Ukraine, Huawei Executive Office Speech No. [2016] 068)
Society has undergone many twists and turns. We have already touched the feet of truth. Don’t always think that we fail in what we are doing. What is failure and what is success? If you walk on a path and find that it is wrong, but you tell your colleagues about it and they then try another one, this is also success. Your experience will be greatly enriched during these so-called failures. … When assessing employees, we must not use a simple black-or-white mindset. I am referring to you guys working in research projects, not projects of certainty. (Ren Zhengfei: Speech at a Meeting with Employees of the Noah’s Ark Laboratory, Huawei Executive Office Speech No. [2016] 083)
In scientific research, we must not suppress people with different opinions. This is what I mean by multiple paths. We must respect different opinions, which is necessary to make multiple paths possible. The paths we take in the future will thus become wider and wider. If we want to become a global leader, we must be open-minded. (Ren Zhengfei: Remarks at Meetings with Huawei Fellows, Huawei Executive Office Speech No. [2016] 069)
Huawei pushes its employees through a “bottleneck”. This is part of our core values. After being pushed through the bottleneck, employees can run faster and faster, propelling the Huawei “machine” to move forward. We are now making changes, so that all of you can unleash your potential and be inspired. (Ren Zhengfei: Remarks at Meetings with Huawei Fellows, Huawei Executive Office Speech No. [2016] 069)
Innovation in the future must be multidisciplinary. However, it is impossible for Huawei to have so much multidisciplinary talent, so Hu Houkun
5 said that we should weaken the “staff badge culture”. Previously, we used the term “narrowband and high amplitude”, meaning that each employee is very strong in one area, but his or her scope of knowledge is rather narrow. However, if we combine the expertise of all of our employees, we will achieve “broadband and high amplitude”. How can we become multidisciplinary? Through all kinds of combinations. These measures will be how we approach research in the future.
(Ren Zhengfei: Remarks at Meetings with Huawei Fellows, Huawei Executive Office Speech No. [2016] 069)
People in the first echelon may not have time to read books or corporate documents, and they might be worn out within a couple of years. So the second echelon, or the rising stars of the future as we call them, will take the baton, build on what the first echelon has achieved, and continue to press forward. From the comments posted on our Intranet, I see our younger generation is catching up and picking up the baton from the first echelon. But we still need to prepare our second echelon and recruit top students in China majoring in lasers, physics, and chemistry. Lasers are fast, and students studying lasers tend to think fast as well. Zheng Baoyong
6 is one such example. The second echelon should not do exactly the same thing as the first echelon; that’s not what they are there for. The second echelon should be able to identify the problems that already exist, and resolve issues that the Red Team has never thought about or has no capacity to resolve, or even issues that are very different from the Red Team’s thinking.
(Ren Zhengfei: Scale New Heights and Forge Ahead into Uncharted Territory Along Multiple Paths in Multiple Waves—Key Messages of Discussions at Mobile World Congress and in Ukraine, Huawei Executive Office Speech No. [2016] 068)
Huawei holds tight to the pipe strategy, remains open and collaborative, and aims to unite as many people as possible to explore the future direction and keep uncertainties under control. (Ren Zhengfei: Remarks at Meetings with Huawei Fellows, Huawei Executive Office Speech No. [2016] 069)
In addition to achieving success in the marketplace, we should also accomplish something in technology. On top of the more than 8 to 9 billion US dollars invested in development, we are also investing more than 3 billion US dollars in research each year. Why are we expanding our efforts into basic research? Because this is a rapidly-developing era. The whiplash pace of network progress has made it impossible for us to continue the slow practice of understanding scientific papers, conducting engineering experiments, and then developing products. Now we need to get involved in scientists’ exploration and research, and think about how we can turn their research results into products. We will encourage scientists and engineers in our dozens of centers of expertise (COEs) to proactively explore, and will assure them that they don’t need to be afraid of failure. In addition, we will transcend the limits of our “staff badge culture” and sponsor scientists worldwide who are moving in the same direction as us. We don’t invest for a narrow purpose. As I noted at the National Academy of Sciences of Belarus, we support scientists selflessly. We don’t aim to own their papers, patents, or other achievements. We simply wish to keep abreast of their progress, including both successes and failures. Similar to a lighthouse, scientists can illuminate us, and also others. We don’t seek to own the lighthouses or interfere in how their research results are applied. (Ren Zhengfei: Be First to Know When Springtime Comes. Vow Not to Return Till We Reach Our Goals—Speech at an Oath-taking Rally for Reassigned Senior R&D Experts and Managers, Huawei Executive Office Speech No. [2016] 093)
3.1.3 Absorbing the Energy of the Universe over a Cup of Coffee
We must be more open-minded. We can exchange ideas with others in coffee houses or share ideas online to inspire the next generation of talent. (Ren Zhengfei: Speech at the Meeting with Staff from the 2012 Laboratories, Huawei Executive Office Speech No. [2012] 035)
Our senior managers and experts are expected to attend more international conferences, and sit down for a coffee with others, aiming to find inspiration by communicating and exchanging ideas with others. After returning from conferences, they need to write down their thoughts on what they saw. They may not think this is a big deal, but what they write may inspire other people and help them succeed. They contribute if they help someone else in the company succeed. The reason we have so many strategy retreats is that we want to explore the correct strategic positioning. This is what we call “absorbing the energy of the universe over a cup of coffee”. (Ren Zhengfei: The Best Defense Is a Good Offense—Remarks at a Briefing on the Wireless Network Business, Huawei Executive Office Speech No. [2013] 232)
We need to absorb the energy of the universe over a cup of coffee. Why don’t our Fellows
7 communicate their technological ideas with the seeds for the future, like PhDs and doctoral students? If you can have coffee with experts, why not have coffee with those seeds as well? The expense on coffee can be reimbursed. It’s okay if the experts don’t join Huawei. They can still contribute to humanity. By communicating with these high-potential people, we are creating a huge group of like-minded experts and exerting influence on the world. It is like creating ripples in a pond. If one Fellow makes five friends like this and each of these people has hundreds of followers, a lot of people will be influenced. Communicating with others is also an effective way to improve ourselves. We don’t know what the future will look like. The network inside Huawei is very small. If our Fellows stay in the office all day and don’t go out to drink coffee with others, our company may eventually fail. Scientists should not be too restricted by our attendance rules. They might not always be able to clock in and clock out at the right times if they are busy communicating with people outside the company. All in all, we must be open-minded in our management.
(Ren Zhengfei: Absorbing the Energy of the Universe over a Cup of Coffee, 2014)
Huawei must strive to become a world-class company. Currently, we lack thinkers and strategists and only have generals who are good at operations. If our philosophy and direction are wrong, the better we are at operations, the more problematic things will become. So besides technical experts I hope some of you can become thinkers to help build the future world. (Ren Zhengfei: Absorbing the Energy of the Universe over a Cup of Coffee, 2014)
Our senior managers and experts need to become more open-minded, broaden their horizons, and change their narrow mindsets. They need to communicate more and drink more coffee with others. The US’s IT industry is the world’s most advanced. While we continue to bring in high-end experts, our senior managers and experts need to go out and communicate with their counterparts all over the world. They need to learn how to absorb the energy of the universe over a cup of coffee rather than only working hard all on their own. We attend many international conferences and forums. On these occasions, it may only take five minutes for us to get inspired and absorb a lot of energy over a cup of coffee. You won’t know what the world is like if you don’t change your mindset and interact with the world. Sometimes, we may be inspired by only a few words. (Ren Zhengfei: Taking a Long-term View When Making Decisions—Speech at a Briefing by the Chengdu Research Center, Huawei Executive Office Speech No. [2014] 027)
As we move forward, it is not enough to focus only on cutting-edge technologies. We also need to cultivate a group of technology ambassadors. These “ambassadors” should be outstanding experts who not only specialize in a single domain, but also have an extensive knowledge base and strong comprehensive capabilities. While our Fellows are committed to developing new technologies, our technology ambassadors can travel around the world to have coffee with others as assistants to our Fellows and keep up with the latest trends. They can capture new information about the industry through such exchanges and interactions and bring that information back to our platform for analysis. Scientists can then discuss and analyze such information at strategy retreats. If they conclude that the direction is correct, the information discussed will become the main points of the retreats and be sent to our 2012 Laboratories. From there, the 2012 Laboratories will begin technological research for the next decade or two. After we see research achievements after a period of time, we can send them to the strategy marketing department to help with our business planning. (Ren Zhengfei: Speech at the Briefing on Industry Trends and Progress in Fixed Networks, Huawei Executive Office Speech No. [2015] 109)
We will either succeed or fail in innovation. We should boldly embrace “disruptive” ideas. Broken from the outside, eggs will be fried. Broken from the inside, peacocks will emerge. Today, technology advances very rapidly, and uncertainties are on the rise. We are going to be deeply engaged in product development, which is part of our known and certain territory. However, in order to keep pace with the times, we need to increase our investment in uncertainties. We encourage scientists, experts, and engineers – tens of thousands of them – in our COEs to strengthen communication with the outside world in order to absorb the energy of the universe over a cup of coffee. We aim to turn our Strategy and Technology Workshop into a “Roman Square”, an open platform for scientific and technological discussion, so that sparks of ideas will turn into burning fires. Our company should have ideals, and discard the mindset of calculating profits in particular areas. It is hard to plan major innovations. Staying stuck in a rut would be the easiest option, but this would keep us from seizing big opportunities. (Ren Zhengfei: Dedicated to China’s Century-old Dream of Revitalizing Science and Technology, Huawei Executive Office Speech No. [2016] 067)
“Black swans” might appear but, when they do, we hope that they will appear in “our coffee cups”. We must be open-minded, support scientists who are moving in the same direction as us, and understand and support geniuses who may seem eccentric. We welcome “black swans” to fly in our company; they could represent a chance to reinvent ourselves. (Ren Zhengfei: Scale New Heights and Forge Ahead into Uncharted Territory Along Multiple Paths in Multiple Waves—Key Messages of Discussions at Mobile World Congress and in Ukraine, Huawei Executive Office Speech No. [2016] 068)
We should find and support some professors with opinions different from the mainstream. Then we should create a team to follow them, and that team will become part of the second echelon. Quantum communications is a good example. Several years ago, it was widely criticized as something unrealistic and far away down the road. Look at it now. China has already done it. Can we include things like this in one of our paths as we explore the future? We must be bold in supporting people who are intelligent, including PhD candidates and seemingly eccentric geniuses. And we need to spot them early on, say, in universities. We can begin to support them when they are still students, but they don’t have to join Huawei after graduation. If they later make inventions that can help resolve our problems, we can pay them for the use of these inventions. (Ren Zhengfei: Scale New Heights and Forge Ahead into Uncharted Territory Along Multiple Paths in Multiple Waves—Key Messages of Discussions at Mobile World Congress and in Ukraine, Huawei Executive Office Speech No. [2016] 068)
To absorb the energy of the universe over a cup of coffee, you don’t have to bring all top experts on board or make them part of Huawei. What truly matters is their ideas. Can we set up a Thought Research Institute that mainly comprises Fellows? Fellows must be involved in multiple fields, exchange ideas with others, and be powerful sources of inspiration. This institute will be positioned to conduct research into ideas and directions, not just into technologies. Fellows should not just work on specific tasks, or just care about products. We would like them to just sit down with the right people for a cup of coffee, and share each other’s inspirations to continuously generate streams of ideas. Each research center should have some budgets of their own; it’s a brilliant idea. Xu Wenwei
8 said that we will not touch content or data. That is a major direction, and it’s also a brilliant idea. However, this doesn’t mean we will draw a clear demarcation line. We must develop the capacity to support massive amounts of content and data, but we won’t monetize them.
(Ren Zhengfei: Scale New Heights and Forge Ahead into Uncharted Territory Along Multiple Paths in Multiple Waves—Key Messages of Discussions at Mobile World Congress and in Ukraine, Huawei Executive Office Speech No. [2016] 068)
We need to use American bricks to build our own “Great Wall” and allow the eccentric to dance on it. We should be very open-minded when it comes to research on artificial intelligence (AI). Conducting research yourselves is also a good idea; otherwise, you won’t be able to know whether you’re moving in the right direction, or on which areas you should focus. There are companies who are doing better than us. We can bring in what they have made to our company. (Ren Zhengfei: Speech at a Meeting with Employees of the Noah’s Ark Laboratory, Huawei Executive Office Speech No. [2016] 083)