Thriving during disruption: Lessons in leadership agility from BYD

When the global semiconductor shortage hit in early 2020, most car manufacturers treated it as a brutal logistics problem.

They fought for allocations from chip-makers, renegotiated contracts, cut production, and delayed launches, then waited for the storm to pass so they could return to normal.

BYD, the Chinese electric vehicle (EV) manufacturer, faced the same challenge. However, senior leaders at its Shenzhen headquarters responded differently.

They viewed the shortage as a live test of the company’s strategy and their own strategic mindset as leaders.

For years, BYD had been an outlier. Founded in 1995 as a battery firm, it moved into automobiles by steadily internalising more of the EV value chain: batteries, motors, power electronics, software, assembly.

In an era obsessed with “asset-light” partnerships and balance sheet elegance, BYD recognised that neat finances can mask strategic fragility.

By outsourcing critical capabilities, firms often trade apparent efficiency for hidden vulnerabilities. Therefore, BYD moved in the opposite direction and prioritised ownership and control. This allowed it to retain strategic autonomy when disruption materialised.

How should firms respond to an external crisis?

By the late 2010s, that bet had begun to pay dividends. BYD had become China’s EV leader, was accelerating overseas, and became the first automaker to produce five million ‘new‑energy’ vehicles.

That success was driven by a distinctive leadership model. Executives with engineering backgrounds ran frugal offices. They channelled their capital into manufacturing plants, R&D, and data systems such as supplier‑relationship and warehouse‑management platforms rather than corporate gloss.

This ensured strategy and leadership were tightly coupled to real operations.

The semiconductor crisis posed a deeper question for BYD and its rivals, one that sits at the heart of strategic leadership in volatile environments.

Do you see disruption as a temporary shock to be absorbed by pushing the existing system harder?

Or as a signal that your system – and your strategic position in the value chain – needs to be reconfigured quickly, under uncertainty?

Eliminating strategic vulnerability

Most car manufacturers took the first approach. Meanwhile, BYD’s leaders asked a different question: if we cannot reliably buy the components that underpin our strategy, is that not a strategic vulnerability we must eliminate?

That shift in framing – from “shortage management” to “capability design” – was the critical leadership move.

Because BYD owned so much of its value chain, its senior team could see the full system: how specific chips interacted with vehicle platforms, performance targets, and future product plans.

It didn’t take long for one operations leader to ask the question their colleagues had been circling. If external supply is structurally unreliable, why don’t we design and manufacture our own semiconductors?

On paper, that sounded reckless. Chip design and fabrication are capital‑intensive, highly specialised, and tightly regulated.

BYD was already under strain, with some models facing delivery times of around 3.5 months (while rivals like Tesla were delivering in weeks), and cancellations were eroding future revenue.

Vertical integration had delivered resilience, but it had also contributed to chronic delivery pressure, fragmented IT systems, and limited collaboration with external suppliers. Pushing further into components risked overreach.

Using pattern recognition to inform strategy

The mindset on display, however, was not naïve boldness. It was pattern recognition.

Leaders looked back at two decades of choices. Each time BYD had identified a bottleneck that threatened its strategic freedom – batteries, motors, power electronics – it had internalised the capability, then used it as a platform for further innovation and cost advantage.

Semiconductors now looked like the next bottleneck in that sequence, and the crisis made the cost of dependency painfully visible.

That mindset led them to a series of conscious leadership choices.

First, authority followed competence, not rank. Instead of a task force selected solely on seniority, BYD assembled a cross‑functional group of engineers, production managers, and supply‑chain specialists already working with data from its ‘intelligent’ supply‑chain tools.

The people who understood the technical and operational implications of chip design were placed at the centre of the decision process. Senior leaders set the intent and the appetite for risk, but they did not hoard detailed decision rights.

Second, the intent was clear but the route was left open. Top management articulated a strategic north star – “secure and control our critical components quickly, without compromising safety or quality” – and then created guardrails rather than scripts.

Within those boundaries, teams were free to iterate designs, exploit BYD’s warehouse and lab data, and reconfigure flows. The only time they escalated issues was when they required organisational roadblocks to be removed.

This is a particular kind of strategic leadership: you define what must not change, then allow almost everything else to be rewired.

A fast and frugal response to disruption

Third, leaders practised frugal, fast learning. Rather than waiting for a perfect, optimised chip platform, BYD aimed for a first generation good enough to stabilise production.

Prototypes moved quickly between lab benches, test vehicles, and production lines. This was supported by digital infrastructure such as advanced warehouse management and electronic labelling systems that gave granular visibility into parts and inventories.

Leadership attention followed these cycles closely; executives spent time in factories and labs, not just in conference rooms.

Within months, BYD had begun producing proprietary semiconductors tailored to its own architectures. It still sourced the components externally where necessary, but the strategic calculus had changed. A vulnerability had become, at least in part, an advantage.

As competitors announced plant closures and lengthening backlogs, BYD maintained and in some lines increased its output, consolidating its position in the EV race.

That culminated in BYD overtaking Tesla as the biggest-selling EV manufacturer in the world during 2025 – a remarkable change of fortunes since Elon Musk mocked the quality of BYD’s technology during an interview with Bloomberg in 2011.

From a strategy and leadership perspective, what matters is less the specific move that BYD made into designing and manufacturing its own chips, and more the mindset that made it possible.

The key was that leaders treated a crisis as an X‑ray of their business model, questioned long‑held assumptions about where the firm sat in the value chain, aligning authority with competence, and invested in intelligent, sustainable operations as the backbone of agility.

This offers three valuable lessons for leaders in other organisations.

1 Treat crises as capability audits

Disruptions are not simply shocks to survive. They also expose where your business model is strategically fragile.

Ask which dependencies are merely painful, and which you cannot afford to carry into the next shock. Then decide which capabilities you must own, influence, or redesign so that future disruptions leave you stronger, not just scarred.

2 Allow the experts to have authority

In most organisations, stress drives decisions upwards, away from the people who understand the problem best. BYD showed the opposite move can be far more fruitful.

Push authority towards those with the deepest technical and operational insight, while senior leaders retain control of the intent, risk appetite and guardrails.

The next time that disruption strikes, map who truly has the best information and redesign decision rights accordingly.

3 Build agility before you need it

You cannot improvise cross‑functional teams, frugal experimentation, and fast, guardrail‑based decisions from a standing start.

They are the product of years of leadership behaviour, structural choices, and cultural norms.

The practical question is: what are you doing today in the way that you develop leaders, design governance, use data, and spend time, that will make a BYD‑style response possible when your own semiconductor‑moment arrives?

For leaders looking ahead to the next wave of disruption – whether in AI, climate transition, or geopolitics – the real strategic advantage may not lie in predicting the next shock.

Instead, it might come from quietly and deliberately constructing the kind of leadership and organisational system that can turn that shock into forward motion.

Further reading:

How should digital start-ups pursue growth: Learning from Douyin

How to build a resilient organisation

The NASA Pirates that transformed mission control

Why imitating innovation can be a successful strategy

Dimitrios Spyridonidis is Professor of Leadership and Innovation. He teaches LeadershipPlus on the Full-time MBA, as well as Leadership and Strategic Leadership Development across the Executive MBA, Executive MBA (London), Accelerator MBA (London), Global Online MBA, and Global Online MBA (London). He also teaches on the Leadership Accelerator module on the Accelerator MBA (London).

Learn more about our developing agility and resilience as a competitive advantage with our Executive Education programmes Leading Through Innovation and Strategy Into Action at WBS London at the Shard.

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