Wolfpacks lead industries in digital, intelligent era

Huawei Connect: Guo Ping says the days when companies can succeed by going it alone are coming to an end.

The Huawei deputy chairman says: “Society is becoming digital and intelligent. We don’t know what intelligent society will evolve into. Yet I am sure every modern industry system will become more complicated.”

As well as being more complex, industries are now interconnected and integrated. This has forced companies to be more open and flexible.

Guo says traditional companies get their advantage over competitors from their core competencies. They also own and control key resources.

Society more digital, intelligent

That competitive model is outdated. Today there’s a need to build ecosystems of companies that work together. The move towards a more digital and intelligent society means the effective use of external resources is more important.

Huawei came up with a new senior management structure to reflect this view.

Guo is one of Huawei’s three senior bosses who each take turns at being the chief executive for six months at a time. This allows what is now a large, global scale company to stay nimble.

All three of Huawei’s rotating CEOs retain seniority even when it is not their turn at the top. Each gave a major keynote on a different aspect of the company’s strategy during one of the three days of the Huawei Connect 2016event.

Industry ecosystems

Guo quotes an article in the Chinese edition of the Harvard Business Review to underline the importance of industry ecosystems. A diagram from the article shows a two-dimensional map of business advantage.

Competitive advantage and eco-advantage are the two dimensions . The map is a two-by-two grid with each quadrant characterised by a different animal.

If a business has low competitive advantage and low eco-advantage it is a panda. It doesn’t do that well in its own niche and is unable to adapt to changing environments.

Panda enterprises have weak core resources. They lack the capacity to mobilise and use commercial ecosystem partners. They are an endangered species and only survive in nature reserves.

Tiger enterprises can compete. Indeed, they are fierce and innovative. Yet while they can make breakthroughs in established areas, they are poor at connecting with external resources and partners.

Ants are individually weak but have strong collaboration and organisation. It’s easy to underestimate their power. Although they don’t do well at core competitiveness, they are sensitive to trends, have good mobility and use external resources.

Wolf pack organisations have speed, endurance and collaborate skills. They compete well in their own niche, but are adaptable and can thrive anywhere. Wolves are well suited to uncertain environmental conditions.

Guo may not be comfortable seeing Huawei compared to wolves. It is, after all, just a metaphor used by the Harvard Business Review.

A sense of smell

Yet he says that wolves have a strong sense of smell and a quick response: “These are qualities we respect at Huawei”.

Getting an industry ecosystem to work means building broad alliances of what Guo calls heroes.

He says there are three ways to make this work:
1. Making a bigger cake is more important than fighting for a larger share.
2. Managing cooperation is more important than managing competition.
3. Benefit sharing drives the evolution of the ecosystem. It is also the result of its success.

To win, companies like Huawei have to be ready to walk away from certain value and leave it on the table for partners. There is often plenty to go around.

Guo says in a decade the internet of things market will be worth as much as US$100 trillion.

“Huawei is committed to the pipe strategy. I’d like to see the internet of things evolve like the electricity industry where the development of the grid led to the invention of many new devices. Even if we only get one percent of the market, that would be a huge target”, he says.

Bill Bennett travelled to Shanghai as Huawei’s guest.