Huawei's Transformation From Imitator To Leader: An Essay.

From China’s Countryside to Developed Countries

From Imitator to Leader

Huawei has transformed itself from a technology imitator to technology leader (Liu, 2013). This is not incidental; this is a clear reflection of its re-orientation, adaption, tuning, and recreation strategies. Huawei has about half of its staff working on R&D with over 16 R&D centers and 28 joint innovation centers around the world (Huawei, 2013). Its wide range of products includes not only the traditional network equipment, but also wireless infrastructure, optical networking, datacom, enterprise solutions, and handsets. It was a world leader in designing and employing the world’s first 3G network, it has led, and is continuing lead, the world in the development of the 4G LTE (Long Term Evolution) network (Telecoms 2012), and it has recently delivered the world’s fastest high performance computer (FNN, 2013). In particular, with its far-sighted vision, while 4G is still new, it has already commenced work on 5G, which is expected to be commercially delivered by 2020 (Forbes, 2013). 5G will give mobile broadband speed up to 10 gigabytes – 100 times faster that 4G mobile. These R&D initiatives have played a critical role in propelling Huawei through this change into a position of global leadership.

From China’s Countryside to Developed Countries

Huawei’s initial markets were in China’s rural countryside. Its well-quoted strategy during this period was to encircle countryside first and then capture cities (Business Today, 2009; The Economist, 2012; IntoChina.Asia, 2012). Through the years, its international forays included Southeast Asia, Russia, Africa, Latin America, and Europe. Over the years, Huawei has tuned and adapted its strategy to “developing countries first, developed countries after” (Frost & Sullivan, 2007). This tuning and adoption allowed Huawei to gain sustainable traction in the international market, and helped it to transform its internal organizational structure and gear the company towards establishing an international presence. In 2004, Huawei’s overseas sales had surpassed that of the domestic market. It now has most of Europe’s major telecommunications corporations among its customers. Its Europe, Middle East and Africa region contributed US $12.4 billion to its revenue, nearly one third of its global revenue (ZDNet, 2013).

Global Operation Expansion 

Even with the uncertain political environment, Huawei strategically set out to gain economic and technological advantages in different geographic areas. It has employed “re-creation” to increase its speed of internationalization since 2001 by creating its localized operations globally. The following examples demonstrated Huawei’s global expansion.

• Initially launched a small software development operation in India in 1999, then opened an R&D center in 2001. The Indian R&D center now is the largest and most important asset outside China.
• Launched FutureWei, a fully owned US subsidiary, in 2002, demonstrating its commitment to international business, and in particular, to the North American market.
• Huawei’s European headquarters are strategically located in the UK in order to tap into this dynamic and innovative telecommunications market and raise its profile in the European markets.

Building Strategic Alliances 

Global Operation Expansion

Entrepreneurial partnerships have become pillars of an overall international venturing strategy for Huawei (Lou et al., 2012). Huawei applies a “re-creation” strategy to make multiple strategic alliances with universities and companies, including competitors and world leading companies, such as Intel, Texas Instruments, Altera, Motorola, Oracle, and Sun. Some of Huawei’s joint ventures are listed below:

• a joint venture with Siemens for developing 3G mobile communication technology products;
• a joint R&D center with Motorola to develop UMTS technologies;
• a joint-venture with security firm Symantec to develop security and storage solutions to market to telecommunications carriers; and
• a joint venture with a UK-based marine engineering company, Global Marine Systems, to deliver undersea network equipment and related services.

Huawei’s mergers and acquisitions support its strategy to become impregnated with its partner’s technology by internalizing it, leading to a more efficient and cost effective method than developing the technology in-house, and at the same time increasing market reach and leveraging brand equity (Lou et al., 2012).

Managing the Change

Change needs to be managed, otherwise failure may result. How did Huawei manage its change?

A Change Agent 

Huawei is a great change agent. Its entrepreneurial growth strategy is in many ways reflected in the entrepreneurial characteristics of the change agent - Ren Zhengfei (Luo et al., 2012). The change agent’s critical role cannot be over played enough.

Ren is the change catalyst and the agent who initiates, sponsors, leads, and executes changes. For example, he realized the necessity of expanding abroad as early as 1995 and pointed out, “We should not wait to expand abroad until everything is ready. Instead, we will get familiar with the markets and then conquer them in the process of learning from our international competitors…” (Luo et al., 2012). When he realized the importance of having international management operations, he made the decision to spend up to 3% of revenues buying advice from Western companies like IBM (The Economist, 2012). With Ren’s far-sighted vision and unwavering support and drive, Huawei was undergoing constant organizational change leading it to become an indisputable telecommunications giant.

Sense of Urgency 

Sense of Urgency is the first and most critical step in John Kotter’s 8-step process of leading change (Kotter, 1996). An “emotional stir up” is critical in order to “break open the shell of complacency and selfrighteousness” in organizations (Lewin, 1951, p. 229). Huawei has this sense of urgency well induced. Ren once said, “We don’t have the reputation and networks that our international rivals do. Thus we have no choice but to make strenuous efforts. We can make good use of our rivals’ coffee time” (Lou et al., 2011). He cautioned his employees that that complacency leads to crisis in the highly competitive telecommunications market. “It is spring now, but that means winter is not too far away, so we will have to ponder about the problems in winter during spring and summer… Huawei must prepare itself” (Wagstaff & Yee, 2012). Ren shares his deep pools of insight about life, strategy, and the company through speeches and publications with his employees. This strong sense of urgency imbued by Ren permeates in Huawei and stirs Huawei’s employees to constantly change and transform.

Building Strategic Alliances

Collective Learning 

Lank and Lank (1995) emphasize that the quality of individual and organizational learning is an important determinant of organizational effectiveness. De Geus (1988) also states that the ability to learn faster than competitors may be the only sustainable competitive advantage. Learning plays a pivotal role in organization development and change. Huawei is a living example of applying organizational learning, which consequently renders it a sustainable competitive advantage.

Ren once said, “We have not yet got rid of our guerrilla style, and the new management style for international expansion has not yet established. ... We must learn from our international competitors” (Lou et al., 2011). In order to catch up to the international best management practice, Huawei imported a world-class management system of technology from IBM to establish and refine the technology management. It actively cooperates with leading management and consultancy companies such as IBM, Hay Group, KPMG, and PwC.

On the R&D front, after the realization that it needed to develop its own technological capabilities because of the fierce competition amongst manufacturers, Huawei tirelessly learned from its competitors and collaborators in order to catch-up and Lead (Liu, 2013). As Barbieri et al. (2013) commented, Huawei’s “double face identity” allows it to be a contributor as well as be a learner in alliance with different leading prestigious companies. The ability to learn from its alliance-based network from leading players has been critical and a springboard for Huawei to shorten its learning curve, stimulate R&D investment and enhance its technological innovation (Zhang & Duysters, 2010).

These collective learnings allow Huawei to acquire and assimilate essential advanced knowledge to increase its global profile.

Communication 

Organizational scholars have long acknowledged the importance of the communication process in enabling successful organizational change. Lewis et al. (2009) in particular, demonstrate how communication can enhance understanding of change implementation activities.

Huawei has established information and communication channels to ensure timely acquisition of information, including its online forum for employees, communication channel for customers & suppliers, and the management meetings at all levels. Managers and process owners regularly organize training programs on business process, internal control to ensure information is up-to-date and is available (Huawei Annual Report 2012).

Huawei’s quarterly magazine, Huawei People, is not only an inspiring read but a powerful communication vehicle – communicating the vision and inspiration for its company and its employees.

Looking Back 

Huawei is a master of change. It has gone through tremendous transformational changes as well as incremental changes on a day-to-day basis. It tackled these changes in a proactive way, as well as, in some circumstances, reactively.

Managing the Change

Through diagnosing Huawei’s change needs, we understand that the company operates in a particularly complex political environment and an uncertain economic environment, along with extremely competitive technological and industry pressure. Inside Huawei, it is a well-designed machine. It has its own unique vision, value, and culture; its own structure and systems; its employees and their motivation. The machine is run from the very top with a unified vision under the uncertain external environment, the machine has feedback from every element within it, and it produces the results we see today.

Huawei has transformed. It changed itself from a technology imitator to a technology leader. Its markets have expanded from the mere countryside to the whole world. Its operations have also expanded internationally in order to become a real international player, learn more and build stronger position. It has purposely created strong alliances with partners and competitors alike to speed up its development process and again build a stronger position.

In terms of change implementation, Huawei has a great change agent, a founder, who is visionary and decisive. He imbues a strong sense of urgency and leads the change. Huawei’s organizational development is highlighted by on-going learning. It learns from world-class management processes; from its leading technologies; and, anything beyond to allow it to achieve its vision.

Looking Forward

Huawei is at a high point and a critical point. It is an extraordinary and inspiring story, exemplifying Napoleon’s awakening dragon prediction which he made two hundred years ago. Without going through tremendous changes and transformation, Huawei would not have achieved what it is today. However, the future is tenuous for all companies: the once giant telecommunications company Nortel is now bankrupt; and the once business-favorite Blackberry is now in demise. Huawei is facing even more challenges ahead of it.

How can Huawei sustainably maintain its competitive position in a Red Ocean (Kim & Mauborgne, 2005) environment? How can it overcome the well-established perception that its products and services are always cheaper than its competitors’ and possibly have less superior quality? How can Huawei not become complacent and stagnant in the face of its long lasting success?

Perhaps Huawei will need to extend into new markets by developing a new breed of products and services which have lower market competition; or perhaps Huawei will need to focus on internal operations ensuring they maintain an edge through exceptionally efficient and effective management and production; or perhaps Huawei will need to reimage itself by creating and promoting high-end products and services which are largely associated with superiority; or perhaps Huawei will need to purposely nurture its staff and executive shaping them into scarce and immutable resources and successful agents of change giving Huawei a sustainable competitive advantage.

Regardless of what the strategies are, we are certain that Huawei will need to go through continuous change to remain at its current front-runner position, and most importantly at some point in time it will need to implement radical changes in order to reinvent itself. However, the final solution remains elusive.

1. Critically analyse the Case Study and determine knowledge management objectives for Huawei. Justify them.
2. Develop a knowledge management strategy (to achieve the identified objectives) that focused on people, KM process and technology

• Use at least two academic methodologies or frameworks (such as Nonaka’s SECI and Knowledge Management Maturity Model) in the strategy
• Must address the following (at least) in the strategy

1. How to motivate employees to participate and share knowledge
2. Role of Big Data and Analytics in managing knowledge in Huawei.

From China’s Countryside to Developed Countries

Knowledge management relates to the way organizations acquire, manage and share the knowledge efficiently and effectively into the organization (North & Kumta, 2018). It is important for the organizations to make knowledge management objectives that can facilitate the security of the information being shared. The first objective of knowledge management is management of organizational memory in which all the information and the pertinent knowledge is properly being accumulated and stored effectively (Girard, 2015). Moreover, Huawei has been storing the technological information and the knowledge available in terms of the innovation, ideas, technology and intelligent data in such a manner that they are stored effectively. The second objective is to make sure that the employees within the organization have proper access and understanding of knowledge available into the organization. Similarly, Huawei has a knowledge management system in which relevant data and the significant information related to the employees are being managed in an effective way that the employees are facilitated by the information being retrieved.

Further, knowledge management has the objective of maintaining accurate information in order to give the required information as and when required. It relates to the purpose of availing complete and timely information through the quality knowledge being transmitted (Wu, et al., 2019). Huawei has been utilizing the accurate knowledge and skills into their products and securing a prominent position into the Internet of Things (IoT) domain. The objective also includes the driving competitiveness which can be facilitated through the proper use of knowledge. It is being argued that the organizations are expected to use the required knowledge to make tactical stakes and competitive strategies for overcoming the competitors. Similarly, Huawei has knowledgeable resources are different from the competitors which has been giving the company competitive advantage over the competitors (Fu, et al., 2018). The company has been using cyber security and user privacy protection through meeting the distinct relevant standards.

Knowledge management strategy is made by the organization in the form of the plan that outlines the activities needed to be taken to manage and control the information and data for increasing the efficiencies into the organization (Mohapatra, et al., 2016). Further, Huawei has a strategy that aligns with the knowledge available at the organizational departments and also aligns with the knowledge management process, focusing on the employees and technology for meeting the objectives of the knowledge management of the company. The company has an organized system or plan that is being used to manage and store the information pertaining to the innovations and the technological improvements (Wang, et al., 2016). The following are the models that can be used for the knowledge management strategy of the company:

Global Operation Expansion

Nonaka’s SECI Model describes the way an organization uses and manages explicit and tacit knowledge available into the organization (Bandera, et al., 2017). Explicit knowledge is a structured knowledge that can be documented, stored, managed and articulated for the purpose of effective use of the knowledge being transferred and learnt. Besides, tacit knowledge is gained through the experiences and can be subjected to personal knowledge that can be sensitive and dynamic. This type of knowledge is difficult to share, manage and transferred containing a lot of human interpretation (Mohajan, 2017). Moreover, Huawei’s explicit knowledge is the knowledge of new equipment, technology and the digital assets held by the company that has the ability to be managed and stored in a coherent manner. Further, tacit knowledge of Huawei is learning of the employees that has been gained through training which the company finds it difficult to manage successfully. This model has four modes in which the knowledge is being conversed which are discussed as above:

Source: (Thornton, 2011)

• Socialization

This process is also called tacit to tacit knowledge sharing. Socialization is considered as the process of knowledge creation in which knowledge is being created through the observation and communication between the communities (Allal-Chérif & Makhlouf, 2016). It seeks to develop a virtual space that provides an opportunity for the communities to interact and share knowledge. Similarly, Huawei has created a communication platform for the increased social communication of the employees and the managerial people. The company has developed an environment in which the communities can have a conversation and are able to transfer and receive the tacit knowledge.

 

• Externalization

In externalization, tacit knowledge is being shared by use of the concepts of explicit knowledge. It can be done through the use of written documents which becomes the basis for sharing the tacit knowledge and also supports the interactions from which the new knowledge is created (Mohajan, 2017). Similarly, Huawei has been using socialization for the creation of knowledge. The company has been making efforts through the issue of magazine which is Huawei People which is proved to be communication vehicle for the increased sharing of tacit information between the employees and managerial staff.

• Combination

It means the combination of explicit knowledge in which the knowledge is explicitly gained and utilized explicitly. In this, the knowledge is attained from inside or the outside sources and is combined and articulated in such a manner that it seeks to develop a new knowledge that needs to be acquired (Bandera, et al., 2017). Moreover, Huawei has been using the combination process for the knowledge sharing by the import of the technological system that has facilitated the company to manage the knowledge that is being gained through the use of the new technology and also has a predefined system for the managing of the technology.

• Internalization

Building Strategic Alliances

When the explicit knowledge takes the form of tacit knowledge then it becomes the part of the knowledge of the individual. Employees within the organization use the explicit knowledge which ultimately help to create the tacit knowledge through the internal process efficiently to improve productivity (Zhang, et al., 2016). Similarly, Huawei has been providing opportunity to the employees to utilize innovation and technology which is the explicit knowledge and use that knowledge to gain the productivity by making it part of the basic knowledge which is specifically required for the daily operations.

Knowledge management maturity model (KMMM) is an engineering approach for attaining the maturity in the knowledge management. It seeks to use a systematic, quantifiable and disciplined approach for the operation and maintenance of knowledge (Kuriakose, et al., 2011). Thus, maturity model of knowledge management seeks to analyze the strengths and weaknesses of the knowledge and also the identification of the development levels into the knowledge management process. In addition, by the application of KMMM in case of Huawei, it can be understood that the knowledge management at this company makes an efficient use of the external knowledge and uses a well-defined engineering approach for the measurement and evaluation of th

Fig: Opinion of people in different job position regarding Knowledge Management

Source: (Bagheri, et al., 2013)

The model divides the maturity level in five levels which are being determined by the key parameters. The key parameters are the specific areas in which the maturity levels are identified in an organization. These key parameters are discussed as above:

• People

This parameter precisely relates to the organizational culture and the strategies pertaining to the internal guidelines that support the knowledge management process. Under it, it has awareness, participation, motivation and rewards and mentoring and success planning (Pee & Kankanhalli, 2009). Further, when these parameters are seen in case of Huawei, it can be said that the company has been using level of maturity to understand the practical level of the knowledge and also makes sure each of the employee is making participation to the activities of the knowledge management. Besides, the company utilizes the evaluation measurement to analyze that each of the employee is benefitted by the rewards and is motivated to participate into the knowledge management process. Also, Huawei has been making the efforts through the mentoring of the activities that can be used in the process of knowledge management and also measures the level of maturity through the various areas.

• Process

Managing the Change

Under the knowledge management maturity model, the next parameter is the process which defines the policy and strategy of knowledge management that ultimately helps an organization to measure the effectiveness of the process. The stage where the knowledge management plan is being made, the organizations seek to develop a criterion which requires a process to define the level of maturity (Kuriakose, et al., 2011). Moreover, Huawei has been making effective process for the policy and strategy development that will outline the core methods and the main purpose of the knowledge management at the company. Besides, the knowledge management process used by the company for the acquiring, sharing, using and maintaining the quality of the knowledge are the key parameters that will ultimately help Huawei to make the identify the maturity level.

• Technology

The organizations determine the technological infrastructure as the parameters being used for the determining the level of maturity in the knowledge management. The technological infrastructure includes the network, Artificial Intelligence techniques, Explicit and implicit knowledge management and the technology integration (Cawthorne, 2015). Similarly, Huawei has been using the effective network connectivity as the parameters and also techniques such as content management and collaboration technique for the increased ease of the company to acquire and maintain the knowledge.

Knowledge management is crucial for every organization to improve the efficiency that requires the participation of the employees in order to attain and share the knowledge on a daily basis. The employees can be motivated to share knowledge by the rewards and recognition being used by the organizations. Besides, undertaking of the effective collaboration can be a useful method for the knowledge sharing which can be undertaken by the creation of the atmosphere for the increased communication (Hu & Zhao, 2016). However, the employees of Huawei have been provided with the information and communication channel that can be used to share knowledge and process the meetings. Apart from this, training programs are being held by the managers of the company that persuades the employees to participate into the knowledge sharing process. This is also be undertaken by the effective mentoring and success planning of the company for the increased motivation of the employees.

There is huge role of big data analytics into the knowledge management. Big data analytics gives an opportunity for the organizations to manage the data and store efficiently. It has been part of Internet of Things (IoT) wherein the organizations face the process of data capturing and then goes through the digital interfaces as per the needs of the organizations. Further, the role of data analytics is to automate the process and innovate the findings translating into the actions by the human interventions and the feedback loops (Cawthorne, 2015). However, Huawei has recognized the importance of Big Data and has accumulated the big data integration by the implementation of a platform that provides intelligent data for the knowledge management capabilities (Huawei, 2017). This implementation has ultimately helped the company to manage the acquired knowledge through the facilitation of the quality audits, data lifecycle management and increased data management that has helped the company to solve the issues and problems through the better data governance solutions benefiting in the reduction in the time to be wasted into the long data preparation.

Looking Back

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