The One Behind It All Chapter 59

Huawei has adjusted the original cross-business department sales model to the current structure divided by business blocks. It has broken up the original unified sales department and divided it into various business departments, forming a product department and sales department based on business units. The service department is completely integrated into an organizational structure similar to a business unit. Aiden was greatly inspired by the U.S. Special Forces: the frontline team of the U.S. Special Forces consists of an information intelligence expert, a firepower and bomb expert, and a combat expert. In this way, Huawei has replaced the account manager who was originally responsible for facing customers. The model was adjusted to a three-person working group composed of account managers, solution experts, and delivery experts, forming a customer-oriented "iron triangle" grassroots combat unit. In terms of project management, grassroots combat units are authorized based on gross profit and cash flow based on the three authorization documents of terms, contract, and price provided by IBM consultants. They directly direct artillery fire within the scope of authorization. Any exceeding of authorization must be approved according to procedures. After the adjustment, the previous single-soldier operations were transformed into small-team operations, the decision-making process was shortened, and internal communication costs were greatly reduced.

Huawei has been implementing a highly centralized management model since its establishment. However, with its rapid expansion, the inefficiency and bloated organization caused by this centralized management structure have become increasingly prominent. Therefore, Huawei is determined to realize the decentralization of some powers under the guarantee of the new financial system. "Huawei would not dare to delegate power easily without the support of a supporting financial management system." said a financial consultant at Huawei.

If you give, you will be rewarded. In August 2008, in the 30 billion yuan equipment bidding for the first phase of China Telecom's CDMA network, Shenzhen Huawei Technologies Co., Ltd. raised its share from 3% to 29% in one fell swoop with an ultra-low bid of 700 million yuan. At that time, many people in the industry were worried that this low-price "enclosure" behavior would hurt their profits and even lead to a cash flow crisis. However, according to the 2008 financial report released by Huawei in April 2009, the operating profit margin for that year increased from 10% in 2007 to 13% in 2008, and the sales revenue growth was 3.4 percentage points higher than the cost growth, and the expense rate was also dropped from 28.47% in 2007 to 26.7%.

Some Huawei insiders revealed that Huawei's increase in profit margins and decrease in expense ratios are due to the company's financial transformation.

However, Huawei is very clear that although its sales revenue has grown faster than Ericsson in recent years, there has always been a large gap in profit margins and per capita efficiency. In terms of per capita efficiency, Huawei's per capita production efficiency in 2008 was US$210,000/person, which was lower than Ericsson's US$350,000/person. Now Huawei has become a large international company with an annual revenue of 18.3 billion US dollars, and 75% of its revenue comes from overseas markets. Huawei not only needs to compete with world-class companies such as Ericsson in terms of scale, but also begins to compete with these world-class companies in terms of profit margins and per capita efficiency. On par.