Chapter 31 Farewell to "barbaric growth"

Huawei has also gone through a period of extensive growth in corporate management. Although Huawei's management has become more and more refined and standardized, there are still some problems in many links.Although Huawei's financial department has been involved in cost accounting since 2000, the company still lacks forward-looking budget management. It is difficult for most Chinese companies to do this, but this is what multinational companies are good at.For example, the pricing and cost accounting of each product has a complete set of systems and operating procedures to ensure that each order can clearly calculate the cost and profit.

According to a test engineer from the Huawei Research Institute, Huawei produces a lot of waste due to lax testing and other reasons in the product development process. He believes that most of this waste can actually be avoided.In fact, in recent years, with the rapid development of business, Huawei's profit margin has been declining year by year.Huawei's 2007 annual report shows that Huawei's operating profit margin dropped from 19% in 2003 to 7% in 2007, and its net profit margin dropped from 14% to 5%. At that time, despite Huawei's strong pace of expansion, how to further increase profitability while maintaining high-speed growth became a problem that Huawei had to solve.It was Ren Zhengfei who realized the seriousness of this problem that he personally wrote to IBM for help in early 2007.Only by embedding standardized financial processes into Huawei's entire operating process to achieve a balanced development of revenue and profits, and saying goodbye to the "coyote-style" barbaric charge regardless of cost, can we more effectively support global operations and growth.

Previously, like most Chinese companies, Huawei's financial department had not yet participated in the pricing and cost accounting of each product, mainly staying in the traditional accounting role.When the company is small, the company can still artificially control risks. However, as far as Huawei is concerned, as the company grows larger, its business is globalized, and its supply chain is getting longer and longer, the differences between customers are getting bigger and bigger. If there is no With a globalized financial management, financial risks will be difficult to control. Therefore, based on the financial management principle of "abandoning extensive and seeking intensive", Ren Zhengfei takes market management, integrated product development, integrated supply chain and customer relationship management as the main process, supplemented by reform projects such as finance and human resources, and comprehensively develops the company's business Process changes, the introduction of practical best practices in the industry, and the construction of a complete IT architecture to support this operation.

From 1999 to 2000, when the process reform was the most difficult, IBM's management consultant made a phased summary of Huawei's management problems: "Huawei does not have time to do things well at one time, but has enough time to do things again and again. .Huawei's company has strict hierarchy and lack of communication culture, which led them to try to solve the problem through various organizational adjustments and meetings. Soon, Ren Zhengfei realized that some factors in Huawei's corporate culture that used to be successful have now become management changes hindrance."

Ren Zhengfei believes that the real difficulty of Huawei's management reform lies in the "conflict between body and use".The management method introduced by Huawei to IBM is regarded as a purely Western modern management concept, but the company's internal way of thinking is still "Chinese style", or "past Huawei style".This way of thinking of "Chinese learning for the body and Western learning for application" has formed a behavior pattern of "separation of body and application" at the employee level. It is very difficult to change this behavior that seems to be inconsistent with the norms.

However, Ren Zhengfei also opposes "total westernization". He believes that this is a move from one extreme to another, just like "Chinese learning for the body and Western learning for application", it is not and cannot be the correct choice for internationalization.In 2000, Ren Zhengfei put forward the famous "grey theory", which is the embodiment of his philosophical thinking and an overview of Huawei's cultural change direction. "Gray theory" is the zone between black and white, right and wrong; the meaning of gray is not to go to extremes, change on the basis of inheritance, innovate on the basis of stability, and deal with problems in the enterprise while adhering to principles and being moderately flexible. Various contradictions and paradoxes.

In early 2002, Huawei conducted closed training for senior managers above the director level for several days, and invited 8 scholars from the Department of Philosophy of Peking University and the Chinese Academy of Social Sciences to teach Western philosophy such as Eastern culture and philosophical thought, Protestant ethics, and the spirit of capitalism. Thought.Ren Zhengfei hopes to use this to broaden the horizons of high-level executives, reshape their thinking patterns, and lay the ideological foundation for the in-depth advancement of management reform. Ren Zhengfei believes that in the process of becoming world-class, Asian companies such as Japan and South Korea have experienced the painful process of corporate culture change, and have also paid high tuition fees for crossing cultural barriers.Therefore, only by establishing a corporate culture that meets the needs of world-class enterprises can Huawei's business process transformation be truly successful.

On the issue of choosing one's own corporate culture, Ren Zhengfei emphasized that Eastern wisdom is important, but in order to realize Huawei's internationalization, it is necessary to realize the "integration of Taoism and art"; China is the best way to inherit corporate culture.And the process of integration of corporate culture and system itself needs a new catalyst - the professionalization of people. Since 2000, Ren Zhengfei has consciously reduced the amount of superficial "exercise" and gradually faded out of people's vision. He no longer focuses on mobilizing employees' work enthusiasm in the way of "engaging in sports" as in the past. More often, he will talk about integrating products. Development, integration of supply chain management as the focus of the meaning and specific content of management change. "Everything companies are doing is diluting the cultural and emotional impact."

Ren Zhengfei once said at the cadre meeting: "If you don't first establish a process-oriented organization and a professional workforce that are in line with international standards, it will be impossible to compete with competitors in high-end products and markets, let alone implement acquisition and merger strategies. , because a group of 'farmers' who came out of green gauze tents would never be able to operate an international modern enterprise, nor would they be able to digest the 'Western-style feast' they bought back home." Ren Zhengfei emphasized: "What we want is success, not slogans. Some people say that Huawei is running peacefully and there is no news. Is it a dead end? We call this 'still water undercurrent'. The surface is very calm, and the water below may be very calm. Deep and urgent. We are now reforming step by step to calm your mind and follow the trend slowly. Huawei is calm now, which shows that the company has gradually become standardized.”

Therefore, Huawei uses a series of means, such as the qualification system, five-level dual-channel career development route, etc., to promote the professionalization level of employees.In the end, Huawei's employee professionalization and management reform became two lines in one direction.The "rejection" between professionalized people and management innovation is greatly reduced. In order to realize the development goal of a world-class enterprise as soon as possible, Huawei has also made amendments to the company's "diplomatic" culture.In the article "How long can Huawei's red flag last", Ren Zhengfei put forward the strategic concept of "I am in you, and you are in me":

Peace and development are the main theme among countries, and openness and cooperation are the general trend among enterprises. Everyone considers that no one can dominate the world in the future. Only by strengthening cooperation, you have me in you, and you in me, can you achieve greater common good. So they are willing to give us some opportunities.This kind of extensive and peer-to-peer cooperation has quickly improved our advantages, and we can quickly launch many new products, enabling us to provide the same services as foreign companies in a short period of time. From Huawei's understanding and practice of product research and development, it can be clearly seen that Ren Zhengfei's understanding of the laws of enterprise development continues to deepen.Huawei also started by acting as an agent of other people's products, and then began to develop its own products. This is something that ordinary companies can do. Then, Huawei invested the profits obtained from switch products into optical network products and intelligent network products, and continued to invest the profits obtained from these products into wireless communication products.This kind of relay thinking that the success of one product promotes the success of the next product is also very natural. However, the most difficult thing for an enterprise is to master the laws of product development, so as to have continuous and efficient R&D capabilities. This requires the establishment of an advanced and standardized R&D management system, through which to ensure continuous success in product development.Huawei invested more than 1 billion yuan in integrated product development that took 5 years to realize this efficient R&D mechanism. Huawei's vigorously promoted employee performance management and qualification management system, namely the human resource management mechanism of survival of the fittest and group talent growth, enables the company's talent team to continuously optimize, optimize, and re-optimize in competition and learning. Through this continuous The "gold rush" process built a team that surpassed all domestic competitors. In 2005, Ren Zhengfei clearly expounded his philosophical thinking and methodology on the development strategy of the enterprise in his report on Huawei's development history for the Guangdong Provincial Committee of the Communist Party of China: "To achieve the goal of prioritizing customer needs, we must carry out continuous management changes. .Only by continuous management reform can we truly build an end-to-end process, be truly professional and internationalized, and achieve the best operating level in the industry. In this end-to-end process, the input end is the market, and the output end is also the market. This end-to-end process The end-to-end must be fast and effective, and the process is smooth. If fast service is achieved, labor costs, financial costs, and management costs will be reduced. In fact, end-to-end reform is a scientific reform of the internal management system of the enterprise, thereby forming the most streamlined Team." After more than 10 years of continuous improvement, at present, Huawei's management system has initially been in line with international standards, thus withstanding the severe test brought about by the company's continuous rapid business growth and internationalization.From the evaluations of international customers, we can see that without these management changes, Huawei would not have passed the certifications of British Telecom and Vodafone after 2003 and become a world-class telecom network solution provider.