If you’ve had a business for any length of time, it’s easy to muse about looking towards the future. Even when you’re successful, you wonder “I can be bigger, I can be better.” There’s a lot of soul searching for every startup and business founder.
We live in a world of marketing marvels, businesses proclaiming the huge successes, but where’s the meat? These days many businesses don’t make profits, they’re funded by investors who bet on their future. The individuals behind these stories are legendary are an inspiration to many.
However, getting funded is more than likely not an option for most individuals I meet who are setting up to start a business. From experience, I can assure you that there are lots of growing pains and lessons to be learned prior to such steps. In the everyday world, becoming profitable and being able to draw enough salary to support yourself and your family is job one. Once you’re profitable, you can reach out to investors to grow if you want, or reinvest the cash and bootstrap your growth. If you seek out investors, you no longer own your company in its entirety; and you have other people to answer to.
Not many startups or home-based businesses have to face this reality. What they first have to decide is whether they have what it takes to get there. Exactly how many personal sacrifices are you willing to make? Having a profitable small business can be a very good thing; but expanding can take a toll on your lifestyle, depending on your needs.
To illustrate, I’ll use an example of an impressive company I’m very familiar with to show you what it takes to grow, thrive and enjoy sustainable growth while innovating.
Recently, this company came out with their Annual Report and some numbers were somewhat below expectations. But looking deeper, there are a lot of powerful facts in it. The company’s net profit margin was 7.1 percent ahead of last year, down from 9.3 per cent in 2015 (although their revenues exceeded $75 billion). One might understand that this would be unsatisfactory to their investors; except that this company is privately owned by its employees. Considering we are our own harshest critics, this must be a pretty bitter pill to swallow. What was the reason?
This company has been in business for thirty years, started in one room of the founder’s apartment in 1987 with funding of about $2,500 in startup funds. Now, they’re number 129 on the Fortune Global 500 list, and have ratcheted upwards on that list for seven years.
For their first twenty five years in business they grew with approximately 500 networking and communication technology clients. They were a pure B2B infrastructure play. Five years ago they pivoted and entered the consumer market. Today they are the third largest smartphone manufacturer in the world, having shipped 139.3 million units, or 9.5 per cent of the global total in 2016.
I’ve written about them here before, this is a Chinese company, Huawei. One of the reasons am fascinated with them is because of what I’ve learned of their business culture. After meeting scores of their employees at several conferences, I’m convinced the tenets of their business model are their keys to success. When I speak to some (from clerks to executives), language is somewhat of a barrier (although they’re most excited to practice English). One thing they all exude is strength, focus and intelligence. They’re playing a long game with customer centricity and the determination to tackle insurmountable problems.
“Resources can be exhausted, only culture endures. Huawei does not have any natural resources to depend upon. What we do have is the brainpower of our employees. This is our oil, our forest, and our coal. Human ingenuity is the creator of all wealth. - - Ren ZhengfeiThere’s something important to be learned here. While enabling the organization is an essential goal, with transformation of company culture, employee empowerment and internal efficiency becomes a big factor in making any company operate. Huawei has big ambitions, and I see a lot of these ideas even in their back end operations as they try to make this happen.
Here’s some more impressive facts from the 2016 Annual Report. In 2016 their carrier units were up 24% and their relatively new consumer group, up 44%. To the end of sustainable growth, a few things have to happen in any business. In this case, they chose to invest 14.6% of their 2016 revenue on research and development.
R&D is one thing, but entering a consumer market dominated by a very few rich companies takes some marketing savvy – and money. At a recent analyst event, Consumer Business Group CMO Glory Zhang, was quoted to say that consumer awareness of the brand is on the rise, but still has a way to go to catch up with Apple and Samsung. Currently Huawei’s brand awareness stands at 76 percent globally, compared with 98 percent for Samsung and 93 percent for Apple.
So what does all this mean for you? I read a couple of books (translated from Chinese) about their core competencies and culture, which is built upon their values of “Customers First, Dedication and Perseverance.” Their human resources management philosophy was proposed by the founder, Ren Zhengfei, and is part of the Huawei Charter and heart of their culture. Here are a few of my takeaways from them on business:
- The most basic goal of an enterprise is to survive, and to survive sustainably.
- The role of culture is to help people move beyond their basic material needs, pursue higher level needs such as the need to fulfill themselves (sic), and unleash full potential.
- The goal of any enterprise is to make itself more competitive, build trust among its customers, and survive market competition.
- The only criterion for success is achieving business goals.
- Our sustainable development relies on whether we can meet consumer needs.
- We need to emphasize the role that knowledge and entrepreneurship play in value creation.
- A steady growth rate is necessary to inspire passion across the company.
- Integrity and competence are the basis for long term employment at Huawei,
- You can succeed as long as you try. If you don’t try, you will not have a chance because fortune favors the bold.
- Huawei only exists to serve its customers.
I only wish I’d studied all of this before I started my career and taken it to heart. While great business and legal minds (also even gamers) draw strategic inspiration from the writings of Sun Tzu, Mr. Ren lends some no-nonsense tactics to business success. His philosophies have enabled his business to grow from one to 180,000 employees in a market when obstacles are many.
If global commonalities between businesses prove true, consider how the above tenets might help your business grow.