Table Of ContentLan Tao
Huawei Wisdom
Develop Strategy to Execution at
Critical Moments
Huawei Wisdom
“Thereisnoendonthewaytosuccessforanenterprise,butaccomplishmentsandgrowth.Every
changeandtransformationpresentcriticalchallengesforthegrowthoftheenterprise.Inthisbook,
Lan Tao reviews the three major transformations in Huawei’s growth, from which we can see
Huawei’sbusinesswisdomatthecriticalmoment.Thisbookcanserveasanexcellentreference
forotherChineseenterprises.”
—PengJianfeng,ProfessorofRenminUniversityofChina,leaderofthedraftinggroupof
HuaweiBasicLaw,ChairmanofHuaxiaChinaStoneManagementConsultingLtd.
“Thestrategicchoicesmadeinthefaceofmajorchangesdeterminethelifeordeathoftheenterprise.
WiththerecordsthecausesofHuawei’sthreemajorchangesandvariousissuestobesolvedinthe
processoftransformation,thisbookhighlightsthetwokeysofenterpriseoperationanddevelopment:
ensuringtheunityoftheformulationandtheimplementationofstrategy,andensuringthematching
ofstrategyandorganizationconstruction.”
—ZhangZhixue,Professor,GuanghuaSchoolofManagement,PekingUniversity
“Changesandtransformationsintheproductdevelopmentmodel,themarketstrategy,andthecore
businessmodelareallrelatedtothelifeordeathofanenterprise.Uponreviewsoverthebackground
andtortuouscourseofHuawei’sthreemajortransformations,thisbookpresentsasetofeffective
methodsforstrategictransformationsthroughthecombinationofthesystematictheorywiththe
practicaloperationsforthecarefulstudybyenterprisemanagers.”
—LiDonghong,DeputyDirectorofDepartmentofInnovation,Entrepreneurship
andStrategy,SchoolofEconomicsandManagement,TsinghuaUniversity,
InstitutionforGlobalIndustry(IGI),VicePresident
“Enterprises,eitherlargeorsmall,willfacethefatalchallengesoflifeordeath,riseandfall.Upon
hisexperienceofthethreechangesinHuawei,Dr.LanTaosummeduparefinedseriesofmodes
andmethodsforthechangesofenterprisesatdifferentstagesofthedevelopmentoftheenterprise,
whichisworthreading.”
—WuJihong,FounderofAIBusinessLab,FormerChairProfessorofHaas
SchoolofBusiness,UniversityofCalifornia,Berkeley,USA,
andnowVisitingProfessorofPekingUniversity
“Themostadvancedmanagementtheoriesandthebestpracticalexperienceassimilated,internal-
ized as the corporate governance structure for the future development through effective change
management,andimplementedineachunitandtoeachpersonthroughstrategies,processesand
rules,thisisjust“HuaweiWisdom”presentedbyDr.LanTao.”
—ZhuXingming,ChairmanandGeneralManageroftheInovanceGroup
“WebegantolearnHuawei’senterprisemanagementmethodsin2013.Sixyearspassed,andwe
have seen an average annual growth of more than 50%. Huawei’s management starts with the
formulationofstrategies.BasedontheBLMmodelofIBM,Huaweihasexploredandsummed
upitsownstrategicmethodology,consistedofasetofmethodsfromstrategicinsightandvision
descriptiontothesettingofprocessandorganization,tomeasurescenteringtalent,atmosphereand
incentive,andfromheadquartersplatformtothefront-linecombatunit.
PersonallygoingthroughthreemajorchangestogetherwithHuawei,Mr.Lanknowsnotonlywhat
Huawei’sstrategicevolutionis,butwhyitis.Thisbook,asMr.Lan’ssummaryandsublimation
ofHuawei’sstrategicevolutioninthepast20years,willserveasavaluableguidefordeveloping
enterprisestolearnfromthebenchmarkenterprise.”
—YanHua,ChairmanandPresidentofFarbenInformationTechnology
“BasedonhisexperienceasthefirstdirectorofHuawei’sstrategydepartment,17yearsofwork
acrossdepartmentsofHuawei,aswellashisrichexperienceinstrategicmanagementconsulting
andcounselingofdozensofenterprises,Dr.LanTaohassummarizedthepracticalexperienceof
enterprisetransformationandstrategicchoiceatcriticalmomentsinthisbookwithin3years.Our
enterprisehasseentheeffectuponthepracticalapplicationofthecontentsofthisbookduringthe
strategicmanagementreformundertheguidanceofDr.LanTaoforoneyear.”
—HeWeixiao,GeneralManagerofHangzhouBoilerGroupCo.,Ltd.
“WithHuawei’sthreefataltransformationsasthemainline,theauthordeeplyanalyzestheevolution
processandtheunderlyingreasonsofstrategy,businessmodelandinnovationpathofHuawei,a
world-renownedenterpriseinthepast20years.Thisbook,depictingthehugecontrastbetweenthe
increasinglyfiercecompetitionamongtheglobalICTindustryandHuawei’spersistentpursuitof
powerwithinitselfforrevolutions,providesanimportantreferenceforthesustainabledevelopment
oftoday’senterprises!”
—LiYuan,Secretary-GeneralofDigitalIndustryInnovationResearch
CenterandFounderofJNExpert
“Thecriticalmomentoftransformationmaybethedarkestmomentofanenterprise’sdevelopment,
butthehighlightoftheenterprise’swisdomaswell.Inthisbook,Dr.LanTaoshowsusHuawei’s
greatwisdominstrategicdecision-makingandimplementation.”
—KeZhou,CEOofBijixia
“HavingpersonallyexperiencedthreefataltransformationalchangesofHuaweiduringhis17years
inHuawei,theauthorpresentsusalotofdetailsintheprocessofkeystrategicdecision-making
andimplementationofHuaweiinthisbook,whichmayserveasavaluablereferencefordomestic
enterprisesfacingsimilarchallenges.”
—NiQikong,FounderandCEOofMBAlib
Lan Tao
Huawei Wisdom
Develop Strategy to Execution at Critical
Moments
LanTao
ShenZhen,Guangdong,China
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Foreword
Since 1978, with the further reform and opening-up of the country, stimulated by
the incentives and dividends like national policies, natural resources, and human
resourcesanddrivenbythehugedemandsforproductsfromscratch,andpushedby
the huge wealth effect of GDP growth from $700 per capita to nearly $10000 per
capita,countlessexcellententerprisesandentrepreneurshavemushroomedinvarious
industriesofourcountry,fromwhichwentoutnumeroustalentsandheroes.However,
only a few of these enterprises see the chances of growing into global enterprises,
becauseinthiscenturyofcompetitionofenterpriseglobalization,participantsmust
buildcorecompetitivenessaroundtechnologicalprogressandmanagementimprove-
ment.Someofourenterprises,being“bigbutnotstrong”,founditisdifficulttocope
withtheglobalpoliticalandeconomicuncertainty,andevenmoredifficulttoface
theattackofinternationalcompetitorsaloneinmarketcompetition.
The present days saw the world experiencing great changes once in a century,
for which Chinese enterprises are bound to shoulder the important responsibility
and historical mission entrusted by the times. Our enterprises must grow bigger
andstrongerwiththecouragetogoabroadandservetheworldcustomerswithour
advancedtechnologyandproducts,sothatpeopleallovertheworldcanenjoythe
high-tech products and high-quality services from Chinese enterprises. To pursue
global expansion, enterprises should continue to adapt themselves to the changes
of the internal and external environment, for the steady enhancement of their core
competence.Changeisanimportantmanagementmethodforenterprisestoredeem
themselves through improved scientific management and further evolution, which
willnotshifttheenterprisesfrombeing“ruledbyman”tobeingruledbylaw,but
alsohelpentrepreneursgrowfromindividualheroestowiseleaders,andfinallyfrom
successfulbusinessmentorespectedentrepreneurs,andeventoindustrialleadersor
businessthinkers.HuaweiissucharepresentativeofChineseenterprises,whoseizes
thepremiseofchanges,thatis,toputthecustomeratthecenterandtocreatevalues
forcustomers,whichharvestedasthecorecompetenceforHuaweitogroundinan
invincibleposition.
Foundedin1987asaprivateenterprise,after32yearsofdevelopment,Huawei
realized revenue of US 100 billion dollars from scratch. Today, we value Huawei
v
vi Foreword
not only for its tremendous growth in business revenue, but also for its important
successfulpracticesinthespan,difficulty,anddepthofmanagementfrommerelya
companyofswitchingtechnologytoanenterpriseofmulti-technologyresearch,from
singleproducttomulti-productlinedevelopment,andfromB2BtoB2CandB2b1
full-serviceoperation.Thecrises,problems,anduncertaintiesfacedbyHuaweiinits
fourcriticalperiodsandstages,fromentrepreneurship,domesticgrowth,andinterna-
tionalizationtogloballeadership,arethemanagementchallengesthatmanyChinese
enterprises are likely to encounter again. Especially at the critical moment of the
currentglobalindustrialchainreconstruction,Huawei’stop-downstrongwill,collec-
tive organizational strength, and resilience against attacks in its forward-looking
performanceareevenmoreadmirable.
SowhatmakesHuawei’scorecompetence?Fromastrategicperspective,thisbook
presentsanin-depthanalysisofHuawei’smotivationforchange,strategicchoices,
andconstructionofcorecompetenceatthreecriticalmomentsafteritsentrepreneurial
periodthroughtheoriesaswellasanabundanceofcasestudies.Throughtheanalysis
of Huawei’s reform and growth process in this book, it is found that from 1998
to 2018, Huawei’s management investment (scientific knowledge, formulation of
rules, talent empowerment, management system optimization, etc.) accounted for
anaverageof1.38%ofitsrevenueannuallyfor20consecutiveyears,whichmakes
thesettledtheuncertaintyofmanagementimprovementthroughthedetermination
upon the rules of management investment. Through reform, Huawei has injected
the expertise and wisdom of the world’s top talents into itself and promoted the
growthandabilityofthecompany’sinternalmanagersandtalents,makingreforma
testinggroundformanagersandtalents.Huaweimakesitsjudgmentsofmanagers
andtalentswithexcellentvaluesuponwhethertheytakethelead,embracethereally,
orpracticethestrategyofreform.Atthesametime,Huaweialsotakesthatchangeto
thecradleofmanagersandtalents.Managersandtalentswithpotentialcanbesorted
outbyexaminingemployees’understanding,experiences,andprogressduringthe
changes.Itistherespectfortalents,knowledge,andwisdom,aswellasthecontrol
of the application of wisdom, scheme co-creation, and integration of training and
practiceiftheenterprisescanlowerthemselvesdowntothepositiontostudy,grow,
andovercome.
Facts have also backed the truth that more than half of the enterprises in most
of the economic powers strive to improve their management vision, level, and
abilitythroughdefiniteandcontinuousmanagementinvestmentandtheintroduction
and utilization of consulting firms. Among them, 80% of British enterprises seek
helpfromconsultingfirms,75%ofAmericanenterprises,andonly8%ofChinese
enterprises.
Asanauthorwith28yearsofpracticalworkexperience,Dr.LanTaohasworked
instate-ownedenterprisesforfiveyears,especiallyfrom1997to2013,duringwhich
timeheworkedinHuaweifor17years,beingresponsibleforHuawei’sinnovation
management,strategyformulation,andmarketingreform.Since2014,hehasbeen
devotinghimselftomanagementresearchandenterprisereformpractice,providing
1The“b”inaB2bherereferstosmallandmedium-sizedenterprises.
Foreword vii
qualityreformandconsultingservicesfordozensofcompanieswithhisrichmanage-
mentwisdomandenterprisepracticalworkachievements.Withthecommonconcept
of“puttingthecustomersatthecenter,aswellasspreadingmanagementwisdomto
Chineseenterprisestohelpthemgrowbiggerandstronger”,weareherewitheach
other.
AstheChinesesayingsgo,“Ajourneyofathousandlibeginswiththesingle-step
under your feet” and we should “handle it before it happens and govern it before
itfallsintochaos”.BasedontheintegrationofHuawei’spracticalcases,combined
with the training he offered to more than 100 enterprises and the consultation for
dozens of enterprises, Dr. Lan Tao completed this book in three years. Seemingly
a talk about Huawei, but actually the book explains how Chinese enterprises cope
withtheupsanddowns,crises,andproblemsintheirgrowth.Whetherforexploring
thedomesticmarketorimplementingglobalization,whetherforB2BorB2C,you
willfindthemanagementpracticeandpracticalmethodsofreformfromthisbook
valuableforyouinkeepingpacewiththetimes.
AtatimewhenHuaweiisfacingthefourthcriticalmoment,throughthisbook,the
authorhopestobringimmersiveexperienceandmanagementreferencetoChinese
enterprises, entrepreneurs, and managers upon his summarization of management
experienceinmorethan30yearsthroughthethreemostimportantcriticalmoments,
withanexpectationthatourChineseenterpriseswillworktogethertocreateabetter
society!Thegrandpassisasironasironis,andnowit’salloverfromthebeginning
again!
ShenZhen,China FanHouhua
FormerVicePresidentofHuawei
OverseasMarket
Preface
Upon his 17 years of working experience in the strategic department of Huawei
and following the three major transformations of Huawei along with its history,
the author of this book introduces how Huawei changes its product strategy from
“R&D as the center” to “customers as the center”, how Huawei alters its market
strategyfromdevelopingdomesticmarkettoglobalmarket,andhowHuaweishiftsits
businessmodelfromB2Btoterminalconsumersandsmallandmediumenterprises
oriented. Based on the author’s own personal practice in Huawei and nearly 100
cases of consulting services, the author summarizes a set of systematic methods
for enterprises to formulate transformation strategies and implement them in key
periods,whichprovideseffectiveguidanceforenterprisesindifferentdevelopment
stagesbutfacingsimilarchallengesintheirgrowth.
Thisbookservesasasuitablereferencefordomesticmanagersofvariousenter-
prises facing product transformation, market transformation, and business model
transformation.
ShenZhen,China LanTao
ix
Contents
1 Huawei’sSuccessfulTransformationsandRevolutions ............. 1
1.1 Huawei’s First Transformation—Product Strategy
Transformation from “Technology-Centered”
to“Customer-Centered” ..................................... 4
1.1.1 WhatProblemsAreCoveredbytheRapidGrowth
ofEnterprises ....................................... 4
1.1.2 TransformationandUpgradingfrom“CryingupWine
andSellingVinegar”toCustomer-Value-Oriented
Solutions ........................................... 8
1.1.3 TheBasicElementsofSuccessfulTransformation:
Strategy,Process,OrganizationandPeople .............. 11
1.2 Huawei’s Second Transformation: Global Strategic
TransformationfromtheDomesticMarkettoOverseasMarket .... 12
1.2.1 EffortstoBreakThroughUnderInternalDifficulties
andExternalTroubles ................................ 12
1.2.2 SuccessastheNecessityfromthePossibility ............. 13
1.2.3 GlobalizedVisionandPattern .......................... 17
1.3 Huawei’s Third Transformation—Business Model
TransformationfromB2BtoB2C,B2b ........................ 21
1.3.1 HugeImpactonProcessandOrganizationSystem
byBusinessModelTransformation ..................... 24
1.3.2 TransformationandRevolutionLike“StartingaNew
Undertaking” ........................................ 25
1.3.3 SystemModelofHuawei’sTransformations ............. 30
2 ManagementofSystemandStrategiesforProductInnovation ...... 33
2.1 Huawei’s“Customer-Centered”ProductInnovationStrategy ...... 34
2.1.1 The Innovation Strategy and System
Architecture of Huawei—“Inclusive Innovation
with Customer-Centered and Focus on the Main
Channel” ........................................... 37
xi
