Huawei is Building an Ecosystem that’s Immune to "Gray Rhinos"

By/Zhang Qunying

A century ago, American industry began to ambitiously go electric. Power generation grew 24-fold from 1900 to 1930, and was seen as an important metric of economic activity.

Today, the world is becoming more and more digital. New information and communications technologies (ICT) like cloud computing, big data, and the Internet of Things (IoT) have become the next generation of commercial and industrial architecture – not unlike electricity 100 years ago. New ICT is changing the way the world works, and as such, ignoring the impact of this technology is one of the most overlooked risks – or "gray rhinos," as author Michele Wucker might put it – in the 21st century. And just like an enormous gray rhino that's charging right at us, digital prowess will make or break the competiveness of all organizations in the very near future.

Similar to the role of the steam engine in the industrial revolution, and electricity in the energy revolution, digitization is the key driver of a new industrial revolution. More and more corporate leaders are realizing the importance and urgency of digital transformation in preparing their companies for the exigencies of a digital world.

The market research firm International Data Corporation (IDC) forecasts that by 2017, a full 67% of Fortune Global 2000 enterprise CEOs will have made digitization a core strategy for their companies. By 2020, at least half of Fortune Global 2000 enterprises will depend on digitally-enhanced products, services, and experiences to drive a majority of their business.

Unavoidable changes to industries and ecosystems are on their way. Simply put, the future is unknown, and the existence of uncertainty is just about the only thing we can be certain about. Companies around the world need to pick up the pace and seize new digital opportunities lest they're bulldozed by this massive gray rhino.

Beyond the obvious danger of gray rhinos, we also face the emergence of myriad black swans. Traditional industries that are "going cloud" face a number of difficulties and complexities that far outpace those of cloud natives. Some companies still view cloud and digitization with a traditional mindset, which can limit their ability to get the most out of new technology. Digital transformation isn't just a tool for increasing your market share. It's bigger than that – it's an entirely new way of thinking and doing business.

We should remember the warning given to us by Nassim Nicholas Taleb in his book The Black Swan: The Impact of the Highly Improbable. In it, he wrote about how people often forget about the existence of black swans once they have come and gone. The concept of black swans is just too abstract. What people remember is the specific event, which is clear, easily understood, and vivid in their minds. They forget about the danger of future black swans. 

On the path to digitization, as we face off against both black swans and gray rhinos, enterprises are not just dealing with competition from within their own industry. There is also penetration, integration, and cross-competition from other industries.

Boundaries are crumbling. As siloes disappear, new business models are emerging. Data shows that 88% of former Fortune 500 enterprises have vanished or fallen from the ranking. Since the year 2000, about 50% of the companies that have dropped from the Fortune 500 did so because they did not heed the call to go digital.

The times are changing dramatically, as are industries. During the course of digital transformation, every modern industrial system is becoming more complex. Vertical integration of the value chain is now in the rearview mirror. If we want to sidestep this oncoming gray rhino, we have to understand that our relationship to competition is also changing significantly. "Openness, cooperation, and shared success" are the magic words for top-performing enterprises in the future. Anyone looking to monopolize an industry is only sowing the seeds of their own destruction. 

The key to success in the future is not about blowing the competition out of the water. Rather, it is about who we collaborate with.

A new form of "coopetition" is forming. Enterprises need to have a technical roadmap, for sure. But they also need to be able to grow collaboratively – that is, fend off the risks of future uncertainty by working with other industry stakeholders. In this way, the entire ecosystem can flourish.

Huawei positions itself as a driver of the digital, intelligent world. In this role, we aim to become a preferred partner for the digital transformation of different industries. We hope to serve as the soil and energy that supports the ecosystem, helping customers cope with the impacts of gray rhinos and black swans. By collaboratively exploring new technologies, new business models, and new methods, we can uncover a path toward flexible, efficient, and agile digitization.

Huawei has extensive hands-on experience with digital transformation in many fields, including government, finance, energy, transportation, and manufacturing. Among the top Fortune Global 500 companies in 2017, 197 have chosen Huawei as their digital transformation partner. Of these, 45 are ranked on the Fortune Global 100. 

We are dedicated to working with our partners, to going digital together and making the pie bigger for everyone. We aim to promote robust ecosystem growth while remaining clear on who does what, which means that we won't develop applications or touch data.

Building a successful ecosystem relies on sharing that success. This concept lies at the heart of Huawei's business, which is all about sharing gains with employees and business partners. We extend this sharing to the ecosystem more generally, bringing together as much talent, as many enterprises, and as many resources as possible, and then growing together. The global market for digital transformation is estimated to be worth somewhere around US$10 trillion. As our rotating CEO, Guo Ping, says, "Huawei is content with 1% – the rest should go to our partners."

Huawei fosters ecosystem growth with a four-pronged approach:

  • Founding industry alliances that guide and drive industry development
  • Establishing strategic business alliances to guarantee the commercial success of customers
  • Providing ongoing support for the open source community, which enables community collaboration and innovation
  • Building a developer's platform, which aims to involve more players, inspire innovation, and help the value chain prosper as a whole

As part of its contribution to ecosystem development, Huawei actively participates in a number of international standards organizations involved in domains like IoT chips, access and transmission, M2M platforms, and more. We are a major contributor to 18 mainstream open source ICT communities, and we have organized multiple industry alliances involving eLTE, smart cities, and other fields. 

A flourishing ecosystem is bound to come across its fair share of black swans and gray rhinos, but by working together and sharing success, we can make ourselves immune to them – or at least fend them off while we find our way forward in a thoroughly uncertain future.