SMARTPHONES: Xiaomi’s Foreign Prize Barra Heads for Home
Bottom line: The departure of former Google executive Hugo Barra from Xiaomi marks the end of a chapter for the smartphone maker, which stands only a 50-50 chance of surviving over the next 5 years in the cutthroat market.
The world was all abuzz in 2013 when Hugo Barra suddenly gave up his cozy position as a high executive at Google (Nasdaq: GOOG) to join a then-little-known Chinese smartphone maker called Xiaomi. Gossip swirled that his departure might be linked to a high-powered love triangle, even though the more obvious explanation was that Barra was leaving to join one of the hottest companies in the world’s hottest emerging market.
Fast forward to the present, where Barra has just announced his resignation from Xiaomi, citing health reasons, among other things. Lots was read into Barra’s original move, so it seems appropriate that we look for similar symbolism in his sudden departure after just over 3 years on the job. We should also look at what the future holds for Xiaomi, whose star has faded considerably since Barra first joined the company.
But before we do all that, let’s first review the headlines that have Barra posting his decision to return to Silicon Valley on his Facebook page. (English article) His choice of Facebook for the post seems like a good place to begin the symbolism discussion, since Facebook is based in Silicon Valley where Barra will be returning. By comparison, there was no mention of the move on Barra’s account on Weibo, China’s equivalent of Twitter.
Barra provides a quite detailed explanation of his decision, including his original reason for coming to China to join Xiaomi in Beijing. He says he was excited at the idea of joining such a “rock star”. But then he goes on to say that the intensity of working at Xiaomi ultimately took a toll on his health, and that he realized his home and life were in Silicon Valley.
Xiaomi has added that a senior vice president named Wang Xiang will take over Barra’s main responsibility, which was the globalization of the company. Perhaps that’s a good place to launch our discussion of the many symbolic elements of this story, since the move means a local Chinese will be taking the reins from a foreigner in this important role.
Much has been written these last few years about how Chinese companies are becoming more competitive with multinationals in terms of attracting major talent. Barra’s case was arguably one of the first to demonstrate that point, so some might say his decision to return home may be a setback for that trend.
The truth of the matter is that Chinese companies have come a long way over the last 20 years, but still have many special characteristics that make them difficult for westerners. Those things include lack of formal processes and organizational structures that one takes for granted in western firms, and also far less emphasis on strategic planning and work-life balance.
Tough Environment
Being in such a “live in the moment” work environment can be exciting at first, but begins to wear on westerners used to a more structured situation after a while. I don’t know what the specific case is at Xiaomi, but I suspect the company is probably far too Chinese in terms of work environment for what Barra was used to.
The Xiaomi that Barra is leaving is also far different from the company he joined back in 2013. Back then Xiaomi was being likened by many to a homegrown Chinese Apple (Nasdaq: AAPL), after developing a hip and trendy image through a savvy marketing strategy. But Xiaomi couldn’t match that image with equally good products, with the result that customers often complained about problems with their smartphones.
The current Xiaomi is in a rebuilding mode, starting with its latest model that has gotten some generally positive reviews for its unusual design. The overseas campaign that Barra was leading has also produced decidedly mixed results and perhaps is in need of an overhaul. After some early big success in India, the company has posted far more muted results in the some two dozen foreign markets where it now sells its models.
At the end of the day, some might say that Barra’s departure marks the formal end of Xiaomi’s heady early period, including its recent rapid decline. The assumption of his roles by a Chinese executive will undoubtedly help with internal communications, though the new executive probably has little global experience.
All things considered, Barra’s departure is probably a good bookend for the close of one chapter and start of another for Xiaomi. The new company emerging will probably be just a little less international than the old one, and I honestly would only give it a 50-50 chance of being around 5 years from now due to the intensely competitive environment.
