The world today is changing all the time. With the outbreak of the COVID-19 pandemic, we were reminded that events and phenomena that are thought to be near impossible can nevertheless happen. This means that today we live in a world where predicting the unpredictable has become the newest challenge. As a result, a premium is put on the skill of agility, which includes the expectation that people and organisations are able to deal with any kind of curveball thrown at them (Joiner & Josephs, 2007). Or, in other words, in today’s business world, we are expected to adapt to any kind of change observed. But, what makes an organisation able to adapt and respond in proactive and effective ways when unexpected changes occur? To study this question, we need a holistic approach where we look at the organisation as a whole – a collective representing an institute populated by people.
The field of anthropology adopts such an approach as it studies the whole of the human and organisational experience (Kehoe, 1998). From an anthropological perspective, adaptation is seen as a process that allows organisms to cope with environmental stresses. Being able to adapt signifies that, in any given situation, one is able to pursue one’s goal and ambitions. In the context of organisations, this ability to stay effective in satisfying their goals is considered a function of both the culture of the collective and the biology of those populating the collective. In the present article, I explore more deeply how culture and biology interact in explaining a company’s ability to adapt and change its way of working to respond in satisfactory ways to environmental changes. To do so, I take a look at the Chinese telecom giant Huawei as an example of a company that has been forced to adapt and change due to significant environmental stressors.
Huawei was founded in Shenzhen in 1987 by Ren Zhengfei and currently employs 195,000 employees worldwide. Of these, 131,507 of them own the company, together with the founder. The company became a truly global player when it surpassed the then-world leader Ericsson in 2012 in terms of sales revenue and net profit (Tao, De Cremer, & Chunbo, 2017). For most of its existence, the company relied on its purpose of walking the extra mile to serve the customer (De Cremer, 2017) and was able to do so continuously. As a result, while the company kept growing, the issue of adaptation was not such a big challenge. All of this changed when the US decided to impose sanctions on the company, as Huawei was accused of espionage and the violation of intellectual property rights (IPR). As of 2019, US companies are barred from working with the Chinese tech firm without government approval. For Huawei, this meant, for example, that it lost its ability to license Google’s commercial components for Android. Losing access to Google for its phones caused the sales of the Mate 30, the first phone to lack Google’s Android and Play Store, to plummet. The end result overall has been that, because of the US export bans and being cut off from key software and semiconductors, the company today has lost its leading position in the smartphone industry (also leading to the sale of their budget brand Honor; Ting-Fang & Li, 2020) and has been forced to diversify its efforts by re-anchoring to different industries (De Cremer, 2022).
According to the 2021 Annual Report, for the first time in its existence, the company suffered a decline in revenue, as US sanctions are clearly hurting the company. Specifically, the total revenue of 636.8 billion yuan (US$100 billion) was down 29 per cent from 2020 and was its worst annual sales performance on record. However, at the same time, Huawei did reach CNY113.7 billion (US$17.8 billion) in net profit, which underscored the company’s ability to boost profitability. Even more, cash flow from operating activities grew by 69.4 per cent, which makes Huawei a cash-heavy company, able, as Huawei’s CFO Meng Wanzhou noted, to deal with uncertainty. In fact, with the presentation of the 2021 Annual Report, the rotating chairman Ken Hu said: “And yet when the storm came, we chose to run head first into the rain. We have done everything in our capacity to ensure business continuity, with no interruptions in delivery or service. We have been working day and night to grow the harvest and secure our survival. The pouring rain hasn’t extinguished our faith in what the future holds. Quite the opposite: we’re more dedicated and innovative than ever.”
As a result of this sense of determination and persistence, Huawei has weathered a variety of environmental stressors but seems to be able to maintain stable operations in its ICT infrastructure business and see rapid growth in new business domains like digital power and cloud, and is embarking on a fast track of ecosystem development. So, both the numbers and its new initiatives indicate that, in the face of adversity, Huawei engaged in adaptation efforts to keep performing. Therefore, in line with our anthropological perspective, how did the company manage this, and, more specifically, which cultural and biological factors contributed to their resilience in times of crisis?
The culture of the company has always eschewed overconfidence towards the future, stimulated by their mantra that, no matter whether things go well or bad, the one thing that matters the most is that the company always tries to survive (De Cremer & Tao, 2015). So, under the leadership of Ren Zhengfei, the company fostered a mindset that prepares its people to fight whenever needed. It was then also no surprise that in November 2021, Ren Zhengfei noted that, “When there’s no way for retreat, it’s the road to victory” (Global Times, 2021), indicating that he was not willing to give in to all the sanctions that his company faced and that he wanted the company to keep walking the road that they had always walked by sticking to their core values and products. With statements like this, Ren Zhengfei clearly aims to promote cohesion among Huawei employees and give them a boost of confidence, so they can give their all to ensuring that the company can survive. It is a tactic that aligns well with Sun Tzu’s words that army leaders can increase the cohesion and morale of their troops by putting them in dangerous and threatening situations. For obvious reasons, in going head to head with those parties sanctioning his company, Ren Zhengfei creates a threatening condition for all Huawei employees. That this kind of narrative worked to promote commitment among Huawei employees became very clear when Ren Zhengfei’s daughter Meng Wanzhou was released on 24 September 2021. Huawei employees went out of their way to welcome the hero, saying that they considered her to have arrived home, while at the same time committing to the prospect of a long-term fight to ensure the survival of the company (De Cremer, 2021).
The impact of the mindset to be willing to fight for the survival of the company is obviously also further enhanced by the fact that a large number of Huawei employees are co-owners of Huawei. Huawei is a private company and never went public; nor does it seem to have any intention of doing so (De Cremer, 2018). This situation means that employees are and stay motivated to protect the interests and performance of the company. Under those circumstances, they will show resilience and keep fighting. This is an idea that fits with a famous saying in China that: “When heaven is about to place a great responsibility on a man, it always first frustrates his spirit and will, exhausts his muscles and bones, exposes him to starvation and poverty, harasses him by troubles and setbacks, so as to stimulate his spirit, toughen his nature, and enhance its abilities.” Ren Zhengfei has always been convinced that this kind of work culture will set the stage for good performance and victory, as he has stated his view since the early days of the company that, “If we do not go public, we might someday take over the world” (Tao, De Cremer, & Chunbo, 2017)
Whereas company culture is an important determinant of how people will reason, think, and behave, it is, of course, also the case that organisations consist of people who have their own unique characteristics. The “biology” of the ones populating the organisation also makes a difference in how cohesive and motivated the workforce will be. The fact that Huawei keeps performing and has been able to re-anchor the knowledge that it generates to different industries in successful ways in such a short period of time must also be a function of certain individuals making a difference when deciding and executing their jobs.
A first kind of biology that needs to be considered is the current leadership. Although the founder, Ren Zhengfei, is still recognised as the spiritual leader of the company, when it comes down to the present fight for survival, his daughter Meng seems to have taken an important symbolic role within the company. First of all, Meng showed self-sacrifice for the company after having been detained for nearly three years in Canada. In the eyes of the Huawei employees, she showed resilience and eventually won the battle, which leads her followers to attribute strength and confidence to her – all qualities that promote trust. Second, also at the formal level, her return to China was rewarded, as not only did she continue her job as CFO again, but also became deputy chairperson. This new position puts her in a position to communicate more directly her views regarding the fierce battles that lie ahead for Huawei in their struggle for survival.
Meng has already proven to uplift the spirits of Huawei employees by promoting their feelings of pride and hope. When she returned to work she noted: “Over the last three years, although we have struggled, we have overcome obstacles and our team has fought with more and more courage” (Deng, 2021). Her (symbolic) leadership thus clearly emphasises emotional connections and raises the spirits to continue the fight. As a result, a sense of companionate love seems to have been installed among Huawei employees. Companionate love has been defined as the degree of affection, caring, and compassion that employees feel and express toward one another. It is a deep emotional sense of commitment to the company, where employees show concern for each other’s feelings, express compassion when things don’t go well, and support and care about each other in such stressful moments (De Cremer, 2022).
A second kind of biology includes its employees, especially its knowledge workers. The company has decided to respond to the current threatening situation by adopting a business model of diversification where basic knowledge is applied to different industries. At the same time, however, the company does stay loyal to its original mission to promote basic scientific knowledge and theory, as such indicating that they still consider themselves to play a role in the future when it comes to radical innovation. This means that Huawei wants to keep the best scientists and recruit great minds from all around the world. As Huawei says: “We welcome top minds from around the world with open arms, no matter where they come from.” To achieve this, they have optimised their recruitment and compensation mechanisms for high-end talents. Ren Zhengfei indeed has emphasised that attracting experts is an area of concern for the company, and therefore he has suggested that they are willing to offer salaries on a par with US tech companies to get talent from around the world (Deng, 2021). In doing so, the company is developing a new international-oriented research campus in Qingpu, Shanghai, where experts from all over the world should be able to work and feel at home. Furthermore, the company is also planning to recruit more than 10,000 fresh graduates, committed to basic research, in 2022. And, they want to do so on a continuous basis. As Ren noted: “We must recruit people who are more capable than us” … “Our compensation packages must align with international talent markets, [be] higher than those offered by local talent markets. This is necessary to attract the best talent” (Deng, 2021).
Their commitment to investing heavily in the advancement of basic science makes it clear that they see talented people as necessary to ensure survival and intend to do so by enhancing their investments in basic scientific theory, architecture, and software. In fact, that they mean serious business in terms of basic research is illustrated by the company’s message that, “In basic scientific theory, we are driving the industry ever closer to Shannon’s Limit and even exploring ways to overcome it.” Reflecting this ambition is also the presence of four Field Medal winners – known as the Nobel prize in mathematics – as Huawei employees.
After three decades of continuous growth, Huawei has been hit hard by environmental stressors, including intense and world-encompassing sanctions issued by the US. This has forced the company to scale back on certain ambitions, and to adapt in ways that allow survival of the company. With the launch of the 2021 Annual Report, the numbers seem to suggest that in the initial stages of this adaptation process, Huawei has developed an adequate response and is investing heavily in the right adaptation process. Using an anthropological perspective, the reason why the company seems able to do this depends on the interaction between the culture of the company and the biology of the type of people working for the organisation. Having a mindset of determination and willingness to fight at all times combined with strong connecting and empowering leadership steering talented scientists seems to have equipped Huawei with the right features to battle for its existence.
About the Author
David De Cremer is a Provost’s chair and professor in management and organisations at NUS Business School, National University of Singapore. He is the founder and director of the corporate-sponsored Centre on AI Technology for Humankind at NUS Business school. He has been named one of the world’s top 30 management gurus and speakers in 2020 by the organisation GlobalGurus, one of the “2021 Thinkers50 Radar list of 30 next generation business thinkers”, nominated for the Thinkers50 Distinguished 2021 award for Digital Thinking (a bi-annual gala event that the Financial Times deemed the “Oscars of Management Thinking”) and included in the World Top 2% of scientists (published by Stanford). His recent book Leadership by Algorithm: Who leads and who follows in the AI era? (2020) received critical acclaim worldwide, was named one of the 15 leadership books to read in summer 2020 by Wharton, and the Kindle version of the book reached number 1 at amazon.com. His latest book is On the emergence and understanding of Asian Global Leadership, which was named management book of the month July (2021) by De Gruyter.
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