The article raises the question of the reasons for the success of the business model of the technology company Huawei Mobile. It is noted that such economies have become, as it were, experiments in the field of innovation and business. The article raises the question of examining the case of Huawei Mobile, which achieved superior performance during a technology transition that brought about radical product and market changes. The authors believe that multilevel synergy facilitates the transition process.
Companies often have great difficulty adapting to a technological transition, which is defined as “a fundamental change in the nature of a product and the underlying technology underlying that product”. The authors write that the “cannibalization effect” and the “bias effect” can be two possible reasons for the failures of top management in companies. The “cannibalization effect” suggests that incumbent operators may invest less in radical technologies than new entrants because their investments in radical technologies cannibalize their existing products or competencies. The “bias effect” suggests that some incumbent players, such as Polaroid, NCR and Kodak failed in the mass market because they chose a biased technology trajectory or problematic business model based on their old cognitive framework, even though they have invested heavily in new technologies. The authors propose solutions to these problems. For example, it is proposed to create a separate organizational unit that will focus on research. In this way, mutual interference in ongoing company operations and research will be minimized.
The authors apply the case study analysis method for the period from 2003 to 2011, when Huawei Mobile mainly developed new products. It is noted that the market resources accumulated by Huawei's operating business, including carrier product brands and carrier channel networks, have been used to provide rapid R&D feedback and low-cost brand expansion. Meanwhile, financial resources, organizational culture, organizational structure, and R&D expertise between departments are complementary assets that support subject area research risk mitigation. As a result, Huawei Mobile has made a breakthrough in core technologies and products.
The authors identify 4 stages of company development and explain their triggers. On the development path, Phase 1 technology development and Phase 2 product differentiation are driven by the company's strategy as they are rooted in Huawei's organizational procedures and are mainly driven by latent consumer demand for smartphones with high-performance hardware and attractive looks. In contrast, sales growth in stage 3 and profit growth in stage 4 are dependent on external market conditions. The Phase 3 channel development was driven by internal competition from Xiaomi, Oppo and Vivo, and the Phase 4 brand development was fueled by a surge in demand for high-end mobile phones since 2014.
This article shows how a company in a developing country can become a global leader thanks to a competent technology business development strategy and R&D organization.
Source: Mengling Yan, Yanni Hu, and Xiaoying Dong «Managing Complementary Assets to Build Cross-Functional Ambidexterity: The Transformation of Huawei Mobile» Management and Organization Review doi: 10.1017/mor.2021.22 pp. 1–34. https://www.cambridge.org/core