Learning from Huawei’s Superfluidity

The Huawei logo displayed at the 2018 CeBIT technology trade fair

One of the remarkable features of competitive markets is their extreme flexibility in response to changing stimuli. Prices, quantities supplied, product specifications, technologies deployed, marketing channels, and even business models all adjust with amazing speed.

Not long ago, the global recorded music industry still made more than US$10 billion annually from sales of physical discs. By 2018, almost 60 per cent of the industry’s US$19 billion in revenues came from digital channels. In the world of advertising. digital ad spending in the United States is forecasted to account for more than two-thirds of total media spending by 2023. And it is not just communications and entertainment markets that are transforming at record speed. Innovations in genetic testing are revolutionizing the pharmaceuticals industry. 3D printing is transforming every type of manufacturing from prosthetics to aircraft parts. Generative design using artificial intelligence (AI) is radically changing how new products are created. The sharing economy is disrupting markets from accommodation through to transport. Financial services have begun to be upended by a range of new business models, from peer-to-peer lending to “robo-advisors.”

Contrast this with internal organizations, which tend to change at the proverbial snail’s pace. How often does your company fundamentally change its structure, processes, and job specifications? How often do the people in those roles change, especially among the management ranks? In most companies, these things stay the same for years, or even decades. And when change comes, it is usually episodic, often in response to the appointment of a new CEO.

Is this flexibility sufficient to keep pace with the speed at which customer demands, technology, business imperatives, and competitive threats are shifting today? Not for most organizations. Yet in recent years, consultants and scholars haven’t paid much attention to structures and reporting relationships as critical enablers (or obstacles) in achieving corporate agility. The focus has been on motivating individuals and improving access to knowledge.[1]

We believe rigid organization structures—where resources are captive to particular units and knowledge is used as a bargaining chip in corporate power-plays—explain why many once-dominant global leaders are either floundering or have disappeared when faced with market disruption. Witness Kodak, Nokia, and BlackBerry, to name just a few examples. As the rate of change in business environments accelerates, flexing the organization is becoming a matter of survival.[2] Maintaining alignment between internal structures, processes, and key dimensions of the external environment is critical.[3] In particular, the “fit” between customer needs and the value proposition the organization is capable of delivering needs to exist like never before.

In the past, when customer needs and competitor moves changed only slowly, fit could be maintained through incremental changes in the value proposition, and hence the organizational capabilities, structures, and processes that delivered it. But many companies now face fast-paced change in market demands and a rapid-fire stream of potentially disruptive innovations in technologies, products, and business models. As a result, maintaining fit with the external environment requires an organization to have the dynamic capabilities necessary to rapidly sense shifts in customer needs and market imperatives, and to seize the opportunities that arise by continually transforming itself.[4] This means that the organizational structure, and where and how resources are deployed, must be highly flexible and fluid.

“Despite being a US$100-billion behemoth with over 180,000 employees that needs to remain highly efficient and cost competitive, Huawei is a living organism that constantly reconfigures itself.”

Most companies find it extremely difficult to achieve this organizational fluidity in practice—even leading firms in fast-paced industries, such as Cisco or Microsoft. However, we have found one company that has made significant strides toward closing the gap between internal flexibility and the rate of external market change: Huawei.

Many people only know the Chinese telecommunications equipment maker because of its controversial 5G technology and diplomatic battles, which have impacted relations between China and its trading partners, leading the company to launch a major public relations campaign. This is particularly true in Canada, where Huawei chief financial officer Meng Wanzhou is currently fighting extradition to the United States after being arrested at the request of U.S. authorities late last year for allegedly violating international sanctions against Iran. This article isn’t about the company’s controversies. Based upon independent research, it is about the organization itself.

Simply put, despite being a US$100billion behemoth with over 180,000 employees that needs to remain highly efficient and cost competitive, Huawei is a living organism that constantly reconfigures itself. In other words, it is a super-fluid organization, and if we look beyond its current political troubles, Huawei can serve as a leading example of the extreme flexibility that more and more companies will need to emulate in order to thrive in the world’s increasingly turbulent and fast-paced business environment.

The research that underpins this article began almost five years ago, when Huawei was on the path to becoming the market leader in the global telecom equipment industry. We were struck by the speed of Huawei’s rise to become global number one in such a competitive, volatile, and technologically advanced industry, from a tiny, four-employee start-up established in Shenzhen some 28 years before. Intrigued, we embarked on a journey to understand how Huawei, a firm from a developing country, managed to surpass established multinationals from advanced economies, such as Nokia, Alcatel, Lucent, and Ericsson.

We began by studying the huge volume of publications on Huawei, both in English and in Chinese, that have emerged in recent years. Different commentators advanced many explanations for Huawei’s success, but one of the themes that constantly emerged was the company’s unique capability to change quickly, frequently, and efficiently in response to ever-changing customer needs and a volatile market environment. We decided to embark on a detailed investigation, to understand how Huawei developed such a rare yet powerful organizational capability, even as it grew to become a massive enterprise with several hundred thousand employees all over the world.

To understand this phenomenon, we needed to go far beyond published materials. We planned and carried out a program of face-to-face interviews, conducted in Shenzhen over a period of five weeks, beginning in September 2015, with 15 former senior executives of Huawei, including seven vice presidents, two senior vice presidents, and one executive vice president. Each interview lasted for one and a half to two hours, and centered around the issues related to Huawei’s ability to be fast, flexible, and agile. In particular, we focused on how Huawei is able to reconfigure itself constantly to maintain a match between its internal structure, its resources, and the external environment. During the field trip, with the support of Huawei, we also obtained access to some very important corporate documents that are not public. Through these in-depth interviews and confidential corporate documents, we identified the key building blocks of Huawei’s superfluidity, including its project-based organization, platforms for support service, rotation of management teams, and change-obsessed organizational culture. Delving further into each of these, as the interview program progressed, allowed us to gain detailed insights into why and how Huawei has developed this organizational superfluidity to continually flex with the changing market.

So how does Huawei achieve superfluidity? Four key ingredients go into the mix. First, Huawei is structured primarily around customer needs so as to ensure the customer is at the centre of everything it does. Second, its support functions are built around flexible platforms. Third, its management-level employees are continually rotated between different jobs. Fourth, its culture is one obsessed with maintaining the pace of change. None of these elements alone would be sufficient, because it is the way they continuously interact that results in Huawei’s super-fluid organization.

An Organization Designed Around Customer Needs

Since Henry Ford, manufacturers have typically organized themselves around product lines. The argument was straightforward: manufacturing mostly required dedicated production facilities for each line of products, backed up by a permanent staff with the knowledge, skills, and experience necessary to produce that line of products reliably and efficiently.

Over time, vertically integrated factories evolved into closely coordinated global supply chains that delivered each type of product. The strategic business units (SBUs) that came to oversee them were also focused on a particular set of products. The benefits were focus, scale economies, and accumulated learning, but these benefits came at the cost of flexibility. Customers who wanted changes in the product design, specifications, or functionalities caused headaches, for the simple reason that what they wanted seldom fit the dedicated machinery, skills, systems, and experience that these product-centered organizations had honed to perfection.

Consequently, when customer needs change significantly, these organizations are often too rigid to be able to respond swiftly and effectively.

Despite being a huge manufacturer of telecom equipment, routers, switches, and smartphones, Huawei has achieved a level of flexibility that is an order of magnitude higher than other product-centered companies. It started with the realization that the best way to satisfy the ever-changing demands of the market is to design and redesign the organization around the evolving needs of its customers. To create and maintain fit between what the company offers and what the market demands, Huawei developed a management practice that sets it apart: to reconfigure its organization regularly whenever required by changing customer needs. The outcome of this practice is a highly flexible and fluid customer need-driven organizational structure.

Unlike other mainstream large companies, Huawei does not have SBUs. Instead, Huawei adopted a hybrid structure, dubbed the “twisted pretzel,” which combines some of the characteristics of an SBU-based organization with functional platforms and regional sales support. Rather than organizing around specific products, Huawei created three broad business groups, each of which was directed at winning in a market against a particular group of competitors. The Telecoms Service Carrier business group focused on the market for telecom equipment, and was in competition with Ericsson and Nokia. The Enterprise group was focused on routers and switches, in competition with Cisco. Finally, the Consumer group, focused on smartphones and other devices, competed with Apple, Samsung, and others.

These broad market groups are supported by three services groups, whose role is to underpin organizational speed, agility, and flexibility. The first services group comprises a set of shared functional platforms including finance, HR, procurement, logistics, and quality control, providing all the support services the three business groups need to respond to changing customer needs. The second services group is a shared geographic sales organization that helps all three business groups connect with clients across the world. The third services group, “Products and Customer Solutions,” brings together Huawei’s R&D activities to provide products and integrated information and communication technology (ICT) solutions for customers of each of the three business groups. The three business groups—Telecoms Service Carrier, Enterprise, and Consumer—therefore form the “filling of a sandwich” between the upstream R&D and product development and functional platform groups, and the downstream regional sales groups, which support all three business groups. Unlike a traditional SBU, the business groups cover a broad range of products and “outsource” many of the key functions to Huawei-wide, shared platforms. This enables the business groups to focus solely on the most crucial activities, including obtaining consumer insights, marketing, brand building, channel management, customer services, and customer relationship management (CRM).

By pooling all key R&D, product development, functional support, and geographic sales resources across the company, Huawei avoids the common problem of resources becoming imprisoned within a particular SBU. Instead, these resources can be deployed rapidly and fluidly to wherever they are needed to serve customers, and the capacity devoted to a particular market segment can also be flexed as demand in different parts of the market expands or contracts over the cycle. At the same time, unnecessary duplication among SBUs is avoided. Rather than a rigid matrix designed to resolve competing demands of SBUs and country subsidiaries, Huawei’s pretzel structure is designed to promote resource fluidity and maximize flexibility.

The project that allowed Huawei to win its breakthrough order with Vodafone Spain in 2006 is a good example of this superfluidity at work. Spain’s newly completed high-speed rail network prided itself on state-of-the-art technology and service. But Vodafone was having difficulty delivering a reliable mobile phone signal as the train zipped along. This was a particular problem for the business-heavy route from Madrid to Seville. Huawei committed to delivering a solution, despite the technical challenges. To do so, it assembled a team that drew know-how and resources from across the Huawei organization. The team quickly developed a potential solution. Within two months they had tested it in practice on the 30-kilometre magnetic levitation (Maglev) train that runs between Shanghai’s Pudong Airport and central Shanghai at over 400 kilometres per hour. In just three months they had proven the bespoke system for Vodafone on the Madrid-to-Seville train. Huawei’s rivals, including Ericsson and Nokia Networks, were still preparing their initial proposals for the problem. Vodafone Spain was so impressed by Huawei’s speed and flexibility that the company managed to supplant an existing supplier, Nortel.

Over the years, Huawei has dramatically altered its organizational structure several times, as the needs of its customers have changed. The logic is simple: whenever customer needs change, product offerings—and hence the organization that delivers them—have to change accordingly. Different product offerings require different capabilities, resources, and decision-making processes, and hence different organizational infrastructure.

In order to move beyond customer responsiveness and continually align itself with customers’ changing needs, Huawei realized that it would need to create an organization that could maintain ongoing engagement with its key customers day-to-day. Only then would it be able to gain an intimate understanding of their existing, latent, and likely future needs. To achieve this, in October 2006 Huawei set up its first joint innovation centre near Madrid with Vodafone Spain, building on its successful project to deliver reliable communications for the high-speed rail network. This was a radical step in an industry where supplier relationships had been dominated by tendering for equipment based on tight specifications already developed by the customer. By 2017, Huawei had established 36 joint innovation centres with major customers spanning China, Europe, North America, Latin America, Southeast Asia, and the Middle East. This has transformed Huawei from a supplier into a strategic partner for customers, enabling them to work together continuously to co-develop the future.

Flexing the organization as customer needs change, however, is only one aspect of Huawei’s superfluidity. Another important pillar that underpins Huawei’s customer-driven organizational innovation and design is the creation of the so-called “resource pool.” This has involved Huawei putting all of its top talent into a single, virtual human resource pool. This detaches top talent from functional units and allows them to be deployed and redeployed globally at any time. By breaking the formal ties between top talent and specific units or functions, Huawei has enabled a completely free flow of its most experienced human capital, a key prerequisite for building a super-fluid organization. Again, the commitment to serving ever-changing customer needs is the driving force behind this innovation. Without creating a super-fluid human resource pool that allows talent to be assigned to any task, freely and swiftly, Huawei would be unable to maintain the dynamic fit between its internal resources and customer needs that change at frightening speed.

As a result, Huawei’s overall organizational design and structure, along with its project-based operational model, constantly evolve with ever-changing customer needs. Customer needs therefore dictate everything Huawei does. Many companies pay little more than lip service to customercentricity. What the Huawei example shows is that putting customers at the centre requires a real root-and-branch redesign of the organization’s structure and processes. To achieve the kind of flexible and fluid organizational structure that makes customer-centricity a reality means going far beyond revolutionizing the way customer-facing and project staff operate. It also requires the functional support services and senior management back at headquarters to be transformed, so as to render their capabilities fluid as well.

Support Services Delivered via Flexible Functional Platforms

Despite the considerable autonomy of Huawei’s project teams to assemble the necessary people and resources, and flexibly develop solutions to meet the needs of an individual customer, it would obviously be inefficient for each team, or even business group, to duplicate its own support services such as finance, HR, procurement, production, logistics, and supply-chain management. In most companies, these support services are provided by functional departments embedded within each SBU. In theory, these functional departments should have the advantage of concentrating expertise to become “centres of excellence,” but all too often they become silos that present barriers to rapid and flexible responses to customer needs, especially when cross-SBU collaboration is required. Securing support from the functional organization can involve a tortuous series of approvals before standardized, often ill-suited, services are eventually dispensed.

In an attempt to overcome this problem while preserving functional excellence, Huawei has sought to embed functional expertise in a series of support platforms that project teams from all three business groups can adapt and use to help deliver their customer solutions. Huawei has invested heavily over the years to develop 10 major supporting functional platforms. Each “resource platform,” as Huawei calls them, is built around a different capability: R&D and technology, test and trial, manufacturing, global procurement, marketing and sales, HR, finance and capital, administrative services, knowledge management, and data sharing. These powerful platforms enable the frontline project teams to efficiently access all of the capabilities and resources they require, and make Huawei’s fast, flexible, fluid practices possible. Project managers from all over the world can tap into the resources and capabilities offered by these platforms at any time to serve customer needs.

The use of platforms at the disposal of customer-focused project teams to provide support services, rather than siloed functional departments, has served Huawei well in moving towards a super-fluid organization. It should be acknowledged, however, that as the company has expanded across new customer segments and geographies, the number of processes in these platforms has exploded, with a consequent development of overcomplexity. At its peak, the support platforms were weighed down by 17 core processes and over 10,000 sub-routines. Huawei has now embarked on a massive simplification process, designed to cull unnecessary routines and streamline its support processes, which it estimates will take sustained effort over the coming years.

Continuous Rotation of Middle and Senior Management

Many companies have a practice of rotating their new graduate recruits through different jobs and departments, with the aim of providing them with broad-based experience as a platform to progress up the ranks. Managers become more specialized as they are promoted to senior positions. At Huawei, by contrast, the incumbents of middle and senior management positions rotate between different jobs, including the CEO.

Middle and senior managers rotate between jobs in different specialties (between R&D and HR, for example) every three years. Sometimes, rotation is more frequent: one senior manager we interviewed has worked in 17 different jobs during his 24 years with the company. Rotation also involves working in different locations, and substantial experience working abroad is a prerequisite to senior advancement. As Huawei has increasingly become a project-based organization, managers have to show deep involvement in every step of a project—from opportunity identification to final fulfilment—before promotion to the senior ranks is even considered. Not only is rotation mandatory, individuals do not choose their next post. Instead, they are assigned to a sequence of new roles. As we have seen when “major-generals” are posted to head up a project team as a “captain,” Huawei’s rotation system can require very senior managers to move vertically (downwards) through the organization as well as horizontally. Even the CEO rotates. Three of the seven-member top team take turns acting as CEO for half a year. The rationale is to prevent a single viewpoint from becoming set in stone, avoid a cult of personality from taking root, and establish a self-correcting mechanism that ensures the strategies and direction set by the CEO will be continually challenged and re-evaluated.

To senior managers in most organizations, this multi-level rotation system probably sounds at best disruptive, if not outright destructive. Surely, it is impossible for a senior manager to have the time in any particular role to gain full command of his or her brief, to gain the trust and build the capabilities of the team, and to implement long-term strategies. Certainly, there are downsides and trade-offs associated with the rotation of senior managers, but Huawei believes the gains in terms of promoting superfluidity in the organization more than outweigh these disadvantages.

The first advantage is that the rotation of middle and senior managers removes the plague of corporate empire-building that has resulted in the organizational rigidity from which so many companies suffer. The second advantage of rotating senior staff is particularly important in an environment such as China, where Confucian philosophy creates a bias toward deference to age and seniority, and a tendency to want to please your superiors, even if this is not necessarily best for the customer or the company. In fact, this behaviour is not confined to China; it is endemic to a greater or lesser extent in many national and corporate cultures. For a project leader in Huawei, there is little point in pandering to the whims of your boss, because in a year or two you know they will be gone: rotated on to their next job. Your compensation and prospects for promotion do not depend on whether your boss likes you, but almost solely on whether your project delivers profitably for the customer. In this way, the rotation of senior management makes an important contribution both to resource fluidity and to the promotion of customer-centricity and successful project delivery.

“Knowing they will be rotated on after no more than three years encourages managers to accelerate the pace at which they implement new ideas. If they are going to leave their mark in any role, they need to act quickly.”

A third advantage of rotation is that it helps develop managers that can comfortably wear the “multiple hats” that executives at the very top echelons of a business need to juggle in order to properly contribute to its success. By the time they have reached the very senior ranks, Huawei’s executives are no longer lifelong “R&D,” “finance,” or “marketing” people, inclined to push their own perspective. They have a broad overview of the business, which helps them make strategy decisions that will benefit the whole company.

The fourth advantage of the rotation system is that it helps foster innovation. The rotation of middle and senior managers continually brings new pairs of eyes to each job. The incoming managers have nothing invested in past ways of doing things, and so are more open to change and more willing to experiment with something new. This acts as another key driver for Huawei’s organizational flexibility and fluidity.

Finally, knowing they will be rotated on after no more than three years encourages managers to accelerate the pace at which they implement new ideas. If they are going to “leave their mark” in any role, they need to act quickly. Of course, this could discourage long-term thinking and investment in strategies and capabilities that take many years to build, but in Huawei’s fast-changing business environment, speed is likely to be a key advantage.

The Culture of Superfluidity

The key elements of Huawei’s organization—frontline empowerment, project teams as the core organizing principle, a fluid global human resource pool, support services provided through flexible functional platforms, and the continuous rotation of middle and senior management—are orchestrated to create superfluidity.

The roots of this change-obsessed culture go back to 1996, just four years after Huawei was established. In that year, the entire marketing and sales group, the most powerful and influential unit within Huawei at that time, was asked to resign so the members could be re-hired based on evaluation of their actual qualifications and performance. Over 1,000 employees were involved. This decisively broke the politics and power plays that had taken root and begun to paralyze the organization. It provided a powerful message that both personal and corporate success would come from the continual realignment of resources and individual capabilities with the changing needs of the market, and heralded the start of Huawei’s management rotation system.

But such a culture was hard to sustain. Every staff member had an employee number, allocated in the order that they joined. The seniority of every individual was therefore clearly evident to all. Combined with Confucian respect for age and experience, this led to the emergence of powerful “barons” within the organization, who prioritized the building of their local empires and social capital (guanxi) over flexibility and customer satisfaction. In response, founder Ren Zhengfei initiated a second mass resignation. This time, 7,000 employees were forced to reapply for their jobs, based on their qualifications and performance, rather than seniority. In addition, the old employee numbers were scrapped.

To reinforce the message, Ren Zhengfei called on staff to forget the company’s history and focus entirely on the future, allowing them to move forward, even if it meant cannibalizing existing profit streams. He introduced two corporate magazines. One, Huawei People, focuses on innovation, management priorities, and new management thinking at Huawei. The second, Management Optimization, documents Huawei’s mistakes, problems, and limitations, often in the form of case studies of areas where Huawei has stumbled. The purpose is to identify problems, stimulate change, and encourage continuous innovation and improvement. This is reinforced by an internal, online forum called “Community of Inner Voice,” which is open to all of Huawei’s employees. It is a safe place, where Huawei’s employees can anonymously—and hence openly and freely—criticize Huawei’s policies, management, and even individual senior executives. Ren regularly reads posts on this forum and is provided with daily briefs summarizing the key concerns raised by Huawei’s employees on various important issues. Huawei’s employee online forum has been a hit because it is truly a transparent, free-spirited, open-minded, and self-critical platform.

Huawei’s people do not worry that change will undermine their security, but that they are not changing fast enough to keep pace with the demands of the market. The result is that, rather than being an extrapolation of the past, every new strategic plan is dominated by initiatives for change and improvement that combine vision and imagination with hard-nosed actions and pragmatic improvements. Huawei has undertaken major changes every three to five years. The company has established a strong, change-oriented culture. Change has become a corporate routine. Obviously, such a strong appetite for change at Huawei provides a solid foundation for its flexibility and superfluidity.

To maintain its culture, Huawei has also put in place systems to ensure a continual flow of new blood through the organization. Senior managers are encouraged to retire at the age of 45, often moving to jobs with Huawei’s suppliers or its outsourced training providers, so that their experience can be passed on. This provides space for young, energetic, more open-minded team leaders and managers to be promoted based on success, and to challenge the status quo as they take on greater responsibility. It helps to prevent organizational rigidities from forming and becoming cemented within the company.

A Radical Blueprint for the 21st-century Organization

Huawei’s recipe for creating a super-fluid organization is radical. It overturns the conventional wisdom that manufacturing companies need to be structured as a matrix of product-based business units, functions, and geographic subsidiaries, in favour of the kind of project-based organization used by construction companies, consultants, and investment banks. It dramatically scales back the size of support functions, replacing them with flexible service platforms developed and augmented by small, specialist teams of experts that the project teams can draw upon when they need them. Rather than rotating new recruits through a series of different jobs, it rotates the middle and senior management through new roles in different specialties at least every three years, right up to the CEO. It has engendered a culture that, rather than celebrating the past, focuses almost entirely on the need for change and improvement in the face of ever-more demanding customers and markets.

By combining these initiatives into a self-reinforcing system, Huawei has become a huge, yet rapidly evolving, highly flexible organism. It has developed a robust appetite and the capability to regularly dismantle and reassemble itself, in order to better serve evolving customer needs. After each round of self-destruction and renewal, it emerges even stronger. In this sense, Huawei epitomizes the notion of “creative destruction.” By continually reinventing itself to enable its people, knowledge, and resources to become super-fluid, Huawei’s model goes far beyond popular ideas such as the “learning organization” or the “ambidextrous company.”[5]

However, Huawei’s pursuit of superfluidity is not without potential problems. It inevitably downplays the importance of boundaries that can help different units develop identity and build local loyalty. Superfluidity risks arresting the development of corporate memory, and preventing the emergence of routines that capture accumulated learning and provide decision makers with a frame of reference for their individual actions. Without these basic ingredients, the organization may become ineffective, especially in the chaotic and hyper-competitive environment that many companies face today. In fact, faced with increased uncertainty, these organizational guideposts may be more important than ever to enable individuals to cope.

So far, Huawei has achieved unparalleled superfluidity without completely dissolving its organizational identity, boundaries, and routines. It has recognized that these are key to the functioning of an efficient and effective modern enterprise. At the same time, it fears that they may hinder its ability to achieve the level of internal flexibility necessary to keep up the rate of change in its external environment. It is perhaps not surprising, given its culture and history, that Huawei’s proposed solution to this dilemma is to embark on another round of organizational reform. Rather than abandoning boundaries and routines completely, its aim is to simplify its management processes. The goal is to develop the organizational ambidexterity necessary for fluidity and stability to coexist.

Another potential problem with this super-fluid organization is its ability to continue to attract top talent from around the world. By definition, a super-fluid organization moves fast and changes frequently. Such pace and volatility demand a young and energetic workforce. To date, Huawei has been able to rely on China’s large and young talent pool to largely sidestep the issue. On current projections, however, this demographic dividend will progressively disappear, as the population rapidly ages in the coming decades. Moreover, as Huawei expands rapidly around the world, it must increasingly rely on overseas employees to fuel its future growth. Already among its 170,000 employees, over 40,000 are non-Chinese. Many, especially those from more mature economies, have a rather different value system, work ethic, and aspirations in life than the firm’s young Chinese employees. The relatively high attrition rate within its foreign workforce suggests that Huawei has yet to fully work out how to match the aspirations of recruits from more settled societies with its super-fluid organization. The high-pressure, high-stress working culture is an often-cited reason for the departure of these employees. How a super-fluid organization can attract and retain top talent from around the world remains an important yet unresolved strategic issue.

These issues suggest that other companies need to be careful before they attempt to adopt the principles of Huawei’s super-fluid organization wholesale. At the same time, we believe that the capability for superfluidity is becoming increasingly essential, as the proliferation of information, automation, and digitalization makes it ever-more difficult for a company’s internal organization to keep up with the pace at which its external environment and the demands of its customers are changing. Classic organizational structures and processes, where change is measured in years or decades, no longer seem up to the challenge.

Huawei’s unorthodox approach will no doubt fill many traditionally schooled managers with fear. Huawei operates in a particularly fast-changing and unforgiving market, so not every company will need to transform itself in such a radical way. Return to the fundamental question, however: Is your internal organization flexing and reconfiguring itself at the same speed as your market? In today’s volatile environment, periodic re-organizations are unlikely to be enough. Fortunately, new information and communication technologies promise to provide new tools to enable organizations to become super-fluid. Maybe the time is ripe to seriously question whether your existing programs for organizational change, even if they deliver, are radical enough. A bolder step toward a super-fluid organization may be required to win in the 21st century.

[1] See, for example, Thorbjørn Knudsen and Kannan Srikanth, “Coordinated Exploration:

Organizing Joint Search by Multiple Specialists to Overcome Mutual Confusion and Joint Myopia,” Administrative Science Quarterly 59, no. 3 (2014): 409–441.

[2] Georg Schreyögg and Jörg Sydow, “Organizing for Fluidity? Dilemmas of New Organizational Forms,” Organization Science 21, no. 6 (2010): 1251–1262.

[3] Thomas C. Powell, “Organizational Alignment as Competitive Advantage,” Strategic Management Journal 13, no. 2 (1992): 119–134.

[4] David J. Teece, Gary Pisano, and Amy Shuen, “Dynamic Capabilities and Strategic Management,” Strategic Management Journal 18, no. 7 (1997): 509–533.

[5] The “learning organization” was popularized by papers such as Bernard L. Simonin, “The Importance of Collaborative Know-How: An Empirical Test of the Learning Organization,” Academy of Management Journal 40, no. 5 (1997): 1150–1174” and Eric W. K. Tsang, “Organizational Learning and the Learning Organization: A Dichotomy Between Descriptive and Prescriptive Research,” Human Relations 50, no. 1 (1997): 73–89. More recently, scholars have suggested that executives should strive to make their organizations “ambidextrous”: see Sebastian Raisch and Julian Birkinshaw, “Organizational Ambidexterity: Antecedents, Outcomes, and Moderators,” Journal of Management 34, no. 3 (2008): 375-409; and Sebastian Raisch, Julian Birkinshaw, Gilbert Probst, and Michael L. Tushman, “Organizational Ambidexterity: Balancing Exploitation and Exploration for Sustained Performance,” Organization Science 20, no. 4 (2009): 685–695.