US national security concerns apart, China’s Huawei has one of the strangest governance structures of any multinational company: a “panel” of three chief executives each of whom rotates into the top executive role every six months.
On the issue of Huawei’s links with the Chinese military, the telecommunications equipment company has proved the equal of any western counterpart when it comes to using spin-doctors to push out a strong and consistent message that it has been maligned. But when it comes to the rotating CEOs, its founder, Ren Zhengfei (who is one of the trio), is remarkably frank that the arrangement is a bold experiment. “Even if we fail, we will not regret our choice because we have blazed a new trail,” he said in the most recent annual report.
Traditionally, one person was authorized to act as a company CEO, and the fate of the company rested with this single person. Such a practice echoes the Chinese saying, “Success or failure rests with Xiao He [a Chinese statesman during the Han dynasty].” History has proven time and again that this practice poses greater risks. To meet shareholder expectations and to achieve quarterly and annual operating results, traditionally, CEOs were extremely busy with multiple affairs, didn’t have any time for further study or to think about the future, and were fully occupied each and every day. How could they succeed in such situations? Huawei’s rotating and acting CEOs are comprised of a group of executives. As they seek harmony in diversity, they can help the company adapt quickly to changes in the environment. They make decisions collectively, which avoids corporate rigidity caused by any particular individual being too obstinate and also avoids the uncertainties caused by unexpected risks to company operation.
Frankly, my first reaction was that it was an arrangement that made the messy compromise of appointing two co-chief executives look like neat orthodoxy. As founder, Mr Ren must be the one in charge, even when he’s not. It does, however, raise the interesting question of who, precisely, the US Congress will get to interview if it decides to summon Huawei’s chief executive to a hearing.
Mr Ren has written “time will tell if the rotating CEO system is the right move or not” and “we must not be too critical of our rotating CEO system. Leniency will help them succeed”. Alas for him and his company, leniency does not seem to be the attitude adopted by the the US House Permanent Select Committee on Intelligence.