[Munich, 22 May 2015] Companies seeking to innovate successfully must commit to a long-term program of investment in research and development, Huawei’s Deputy Chairman and Rotating CEO Ken Hu said in a speech about Huawei’s innovation philosophy at the 14th Munich Economic Summit.
“Innovation is not a sprint, it’s a marathon,” Hu told audience members, noting that Huawei has invested at least 10% of its annual sales revenue in R&D each year since its founding in 1987. Last year, the company spent US$6.6 billion on R&D – 14% of its annual sales revenue, and a year-on-year increase of nearly 30%.
“Innovation is part of our DNA, the foundation of our competitive capability,” Hu said. “Almost half of our 170,000 employees worldwide are engaged in R&D work. Over the past 10 years, Huawei has spent more than US$30 billion on R&D.”
This long-time focus on innovation has benefited Huawei greatly. As of last year, the company had received 38,825 patents, more than 90% of which related to inventions. According to a report by the UN’s World Intellectual Property Organization, Huawei filed 3,442 international patent applications in 2014 – more than any other company in the world.
In addition to a long-term investment in R&D, Hu said that successful innovation was the result of meeting customers’ needs and innovating together with partners and research institutions.
“Customer needs should be the driving force and purpose of innovation.” Hu said. “The best reward for innovation is customer success.” He said that Huawei’s innovation efforts are always focused on existing and potential customer needs. For example, Huawei introduced the concept of distributed base stations to the European market when carriers there demanded base stations that were smaller and easier to install.
He also said that companies should innovate collaboratively with customers and industry partners, leveraging global resources and talent to create an ecosystem that encourages innovation. To that end, Huawei operates 16 research institutes and has established 31 joint innovation centers. One of them, the European Research Institute, coordinates the work of 18 facilities in eight European countries, researching next-generation network technologies. Huawei collaborates with many leading companies as well as research institutions in Europe.
The 14th Munich Economic Summit was co-hosted by the BMW Foundation and the Institute for Economic Research in Munich. Attendees included government officials from Germany, France, Italy, the Czech Republic, Croatia, and other European countries; experts from institutions such as the European Commission, the Center for European Policy Studies, the Europe Business School, Roland Berger Strategy Consultants, and UBS AG; and journalists from media outlets such as The Economist and The Financial Times.