Logística Indirecta
5.1 Análisis de la cadena de valor de Calzados Boleje
The Historian’s Visit to Huawei
O
n November 24, 2003, Qian Chengdan, Professor at Peking University and a distinguished scholar of British history, gave a lecture at the Political Bureau of the CPC Central Committee on the “History and Development of Major Countries Since the 15th Century.” His lecture aroused great sensation, not because the lecture was presented to the top leaders of China but because he had revealed an unusual historical perspective.Half a month later, Professor Qian visited Huawei and gave a lecture on essentially the same subject. His audience was over 300 mid-level managers and senior executives of the company, including Ren Zhengfei and Sun Yafang. Before he started, Professor Qian requested that none of the listeners record the lecture, take any notes, or disseminate his ideas.
About a decade has since passed, and the ideological climate of China has been completely transformed. Professor Qian lectures in public, much more often, and his ideas have received mainstream recognition and approval. With the academic advice and instructions of Professor Qian, CCTV produced a documentary titled The Rise of the Great Nations in 2007, which became a nationwide topic soon after it was aired. Ren Zhengfei bought 200 copies of the documentary and asked Huawei senior executives to discuss it after they had all watched it through.
It was at the end of 2013, when Huawei reached a critical juncture in its march to the international market as a new entrant. And a lawsuit was turning this strange face into a familiar one throughout the global
community. Huawei was faced with many tough issues, particularly cul- tural conflicts. Would the world accept this Chinese company, which was already being dubbed a rule breaker? And how would Huawei participate in the international business arena, a game predominated by the West?
Professor Qian provided Huawei a historical and cultural perspective that allowed the company to envision its future. The leadership realized that studying the West, visiting Western countries, and communicating with Westerners would fall far short of the international skills needed if the company was to break into global markets, especially in Europe and America. Huawei had to acquire a systematic understanding of Western culture and institutions and develop the right way of thinking that could guide the company through challenges abroad.
One may wonder how Spain and Portugal had risen to power. Both of them were small countries in the 15th and 16th centuries: Spain had only a land area of 500,000 square kilometers and a population of six million; the land area of Portugal was not more than 90,000 square kilometers and its population was merely two million. But they had virtually occupied the whole world. Why? Their strength had come from their mercantilist agenda. They had navigated all the oceans and traveled far throughout the world. “They would attempt to profit first through trade, and then plunder—and whenever business was not good, they would loot.” They had, in short, taken the world through undisguised robbery and armed adventure guided by a uniform national will and a strong primitive desire for expansion.
In the 17th century, an even smaller country took the place of Spain and Portugal. The Netherlands, which had only 45,000 square kilome- ters of land and a population of one million, grew to become one of the major economic powers of the time. By 1700, the Dutch owned more than 10,000 merchant ships at numerous ports, transporting just about every good from and to each locale the world over. They also created the earliest credit and financial system, and most importantly, the earliest banks. In this sense, mercantilism was very mature in the Netherlands.
The Netherlands remained the center of the world until its decline in the 18th century, when it was replaced by the United Kingdom and France as world powers. According to Professor Qian, both the United Kingdom and France had taken two steps in developing their capitalism: moving from early mercantilism to late mercantilism, and shifting from mercantilism to industrialism. Both were critical steps of modernization.
The United Kingdom, in particular, had ensured its lasting power and prosperity through industrialization, which was a new form of capitalism.
In the 17th century, the British population was only four million, about half that of Spain and a quarter that of France. But the United Kingdom became a global empire, the empire where the sun never sets. With a still rather small population of 40 million in its prime time, the British Empire controlled 50 colonies with a total population of 345 mil- lion and total land area of 11.6 million square kilometers (96 times more than the land of the United Kingdom).
What inspired the senior management of Huawei the most was the Glorious Revolution. As Professor Qian said, “The Glorious Revolution of England in 1688 avoided violence and war, and avoided involvement of the people in the change of the monarch. And the revolution established the supremacy of parliament over the crown, setting Britain on the path toward a parliamentary democracy.” This is the last revolution in British history, but there was no bloodshed or loss of life. What was the secret? The key was rational negotiation and compromise. All interested parties, including the king and the lords, had quarreled, bargained, threatened, and induced one another until they finally reached an agreement that would benefit all in the country. So to speak, they had substituted their tongues for guns and exchange of words for bloodshed. Compromise is a derogatory word for Chinese people, but it had inspired the capitalist ideology and nurtured the strongest capitalist country—the United States. Commenting on the congressional system of the United States, Hendrik Willem van Loon, an American author and journalist, said, “Compromise has saved a nation and founded an empire.”
In the eyes of the media, especially the Western media, Huawei was depicted as a predatory, autocratic, and intolerant company. Apparently, such a perception would hold the company back in penetrating the inter- national markets. It is true that, for over a decade since its establishment, Huawei had acted aggressively like a hungry wolf or a pirate, in order to survive in the cut-throat jungle. Huawei had been, to some extent, char- acterized by offensive and even suicidal competition, and this character was restricting its further progress. On the other hand, while its highly centralized governance had been a solid guarantee for efficient operations and rapid growth, many mistakes had been made, especially in staffing management positions.
Huawei’s Chairwoman Sun Yafang said, “Huawei has been too rigid for years, and we are turning stiff. We must now change.”
So, how would the rise and fall of Western powers inspire an Eastern company?
Must East Wind Really Prevail over the West Wind?
Huawei has been making compromises during each stage of its develop- ment. Ren Zhengfei founded the company, but he has continued to dilute his interest to make Huawei an employee-owned company. Isn’t that a compromise? Ren Zhengfei has compromised with tens of thousands of his colleagues, exchanging his interests for the unity, motivation, and stable progress of the company over the years. This is a rare case among Chinese entrepreneurs, and even the global business community.
Some scholars compare Ren Zhengfei’s compromise to a policy of redemption. They argue that Ren is trying to lure everyone in the orga- nization onto the same boat by giving them material incentives, and he acts as the captain to lead the boat toward a certain destination. His des- tination is becoming a world-class telecom equipment provider, and he intends to accomplish the goal by upholding the corporate core values of customer centricity and dedication.
Ren Zhengfei has never disguised his intention. He compares this practice to the division of the spoils. He is the chief of a gang of pirates who would capture every boat on the sea and share the loot. Whoever seizes the most trophies could enjoy the biggest share of the gains. As the commander of all pirates and a courageous fighter, the pirate chief is also in charge of distributing the bounty. Fairness would be realized only if the gains are shared on the basis of contribution. This would be especially attractive to the hungry and the needy, and followers would gather in a bigger and bigger crowd. Indeed, for about 20 years, Huawei has built up an “army” of more than 100,000 employees.
Excellent leaders must possess such will to share gains and make compromises. But such primitive culture of compromise and sharing “wine and meat” is likely to create superstitious faith in the leader and dictatorship, and the organizational nerve would turn oppressive and tense. Of course, without a tense nerve an organization is vulnerable, but it would break if it gets too tense. In the several years before and after 2000, Huawei was a highly stressed company almost dictated by Ren Zhengfei alone. During this period, Ren was also extremely nervous and fearful. He recalled, “I was thinking about failure every day, and ignored
any success we had made.” He was anxious about the fate of the company in case it failed.
Ren Zhengfei, however, was capable of self-reflection and self-criticism. That is what sets him apart from others. In 2000, being aware of the dic- tating approach across the company concerning the promotion and selec- tion of managers, Ren Zhengfei proposed that compromise was necessary when considering a certain candidate. This was more of a requirement he set for himself than advice to the other senior executives. He once said, “We cannot insist strongly on our own opinions; we should listen to more voices.”
In 2001, in an essay titled “Huawei’s Winter,” Ren Zhengfei argued that Huawei should learn from Yitzhak Rabin, Israel’s Prime Minister, who proposed to exchange “land for peace.” He believed that the com- pany should make certain compromises to ensure its future.
After Professor Qian’s lecture at Huawei, the middle-ranking and senior executives started to learn about Western history, reading books and essays and watching TV programs on the modern history of Western powers. They found that Spain and Portugal had fallen from their peak so easily because they had lost their adventurous pirate culture after they got rich enough. And the Netherlands failed because the country had depended too much on trade and finance that were not supported by the real economy. In other words, the country had suffered from excessive speculation. The United Kingdom rose to power and took their place, dominating the oceans and expanding across the world. It had been able to do this because of its industrialization and, in particular, the Glorious Revolution, which substituted compromise for violence and started the modern capitalist system. As Lord Acton of Cambridge University said, “Democracy is gray, while compromise is gold. Compromise is the soul of politics, if not all.” Generally speaking, politics would start with contro- versy and end with compromise, and the Constitution of the United States is the very result of compromise made 200 years ago. Today, the American people are still amazed by the rationality of the Constitution drafters.
Is compromise the soul of business as well? At least partly so. “In the business community, there are no enemies; there are only counterparts and competitors,” said Guo Ping, Deputy Chairman of Huawei, who is versed in negotiation with the West. Since 2011, Huawei has started to call its competitors “peer vendors” in its public and internal documents. Compromise is prevalent in business deals, negotiations, collaborations, conflicts, disputes, and agreements, and it is the basis of mutual wins.
Compromise also exists within any company or business team because it may prevent the organization from breaking up due to in-fighting or dictatorship.
For Ren Zhengfei, compromise is the means to unite his team and create the necessary synergy that has driven Huawei’s rapid growth. In this process, through self-reflection and self-criticism, he has come to understand “compromise” better: Compromise is more a way of thinking than a means or tool; it means more division of rights than the distribu- tion of gains; it refers to both cooperative competition in the market and team work among colleagues, especially senior executives.
In a speech titled “Openness, Compromise, and Grayness,” Ren Zhengfei said:
For some people, compromise may mean weakness and indetermination, and any hero is uncompromising. This is a typical excluded middle way of thinking. They believe people must be divided into the conqueror and the conquered, and there is no middle ground.
Compromise is in fact a very pragmatic and flexible wisdom of the jungle. Anyone who survives in the jungle knows very well that they should accept offers of compromise or give such offers when necessary or appropriate. One survives through reason rather than passion, after all.
Compromise is an agreement reached under a certain circumstance. It is not the best solution, perhaps, but it is the best before the real best appears. It has a lot of benefits. To compromise does not mean to give up principles. A wise compromise is an appropriate exchange. In order to achieve our pri- mary goals, we can give up some secondary goals. Such a compromise is not an expression of weakness. Instead it ensures that a certain goal is ful- filled through a certain exchange of interests. Of course, any compromise is unwise if it lacks proper balance or misses the primary goal or incurs unnec- essary cost in reaching the goal. A wise compromise is an act of art, a virtue, and an essential skill of any manager.
Compromise is indispensable to achieving mutual wins. If we reject com- promise, we will face confrontations and may end up in a lose–lose situation. Several years ago when we drank tea together, Ren Zhengfei said to me, “Should the east wind prevail over the west wind? Or should the west wind prevail over the east wind? Why don’t we embrace wind from any direction?”
Huawei had been a rigid warrior, but it is learning to become a Judo master since it acquired the “gene” of compromise.