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Strong corporate culture, ability to adapt is best blueprint for going global: Lenovo

The blueprint for any company that pursues international expansion starts with building a strong entrepreneurial culture that adapts to the times, according to Chinese technology giant Lenovo Group.

It is a business principle that has served Lenovo well in its decades-long transformation from a start-up electronics company in mainland China in 1984 into the world's biggest supplier of personal computers.

"When a company becomes bigger, make sure that there is a unique culture committed to execute its strategy," Ivan Cheung, Lenovo executive director and general manager for Hong Kong, Taiwan and Korea, said in his interview at the South China Morning Post's Game Changers Forum 3 on Tuesday.

Lenovo has been a role model for many Chinese technology companies since it acquired IBM's PC business in 2005. Photo: AFP

Lenovo has been a role model for many Chinese technology companies since it rapidly expanded its international operations after acquiring the personal computer division of IBM for US$1.75 billion in 2005.

The computer giant, which operates in more than 160 countries, has continued its expansion with the purchase last year of Motorola Mobility for US$2.91 billion from Google and the commodity x86 server business of IBM for US$2.1 billion.

"We're trying to replicate our success in the PC industry, in the smartphone and enterprise server businesses," Cheung said.

He pointed out that Lenovo translated the principles of accountability and entrepreneurship into a few action points: "We plan before we commit; we perform as we promise; we prioritise company first; and we practice improving everyday."

In their book The Lenovo Way, authors Gina Qiao and Yolanda Conyers said the strong corporate culture keeps the company prepared to change and diversify.

"The Chinese have a saying: To cultivate trees, you need 10 years. To cultivate people, you need 100 years. That's fine with us because we know how to be patient," the authors wrote.

Amid changes in the global economy and evolving consumer tastes, start-ups must also realise that being adaptable can help them survive tough times.

Lenovo currently finds itself in need to be more nimble as global personal computer sales continue to decline and competition in the smartphone and commodity server businesses intensify.

The company last month announced that it was laying off 3,200 employees in non- manufacturing jobs, out of its total 60,000 worldwide staff, under a sweeping restructuring plan.

That would help the company reduce expenses by US$650 million in the second half of its fiscal year to March and US$1.35 billion on an annual basis.

The restructuring will see Motorola be responsible for designing, developing and manufacturing smartphones. The production supply chain for personal computers and servers will also be integrated.

Yang Yuanqing, the chairman and chief executive at Lenovo, said last month that the company targeted a 30 per cent global market share in personal computers and the turnaround of its mobile devices business in two to three quarters.

Question:

What changes did Lenovo undergo? Process change or strategic cultural change? Explain your answers based on the consideration of the theme of change, driving force, and the degree of the organization changes. What are the reasons for Lenovo’s to success?

Answer 1

Lenovo underwent a major strategic culture change. In the late 1900's, when they started of as a startup electronics company, they didn't have much to play around with. However, with time, they have expanded their business, invested in the key areas that were required to be addressed. The basic of theme of their change has been a proper structural expansion of the company. They have sorted out their basic principles first. Addressed them with utmost priority and cam out with successful results. The acquiring of IBM's PCs' and the Motorola company, added more to their armoury. They have consistently focused on quality, services, behaviour and implementation of their strategies. The driving force behind Lenovo's success has always been serving quality to it's customers. Improvement has always been a key aspect of their success.

The main reason for Lenovo's success is their main moto, which is as mentioned, that before they commit, they promise to deliver always. They have always strived for improvement, improvisation and perfection, which has been a key to their success.