Lenovo Leadership-ppt PDF

Lenovo at the Crossroads Prof. Allen Morrison TGM 545 [email protected] 1 2 1 3 Discussion Questions 1. When you compare Lenovo’s four phases of growth, what common the...

Lenovo at the Crossroads Prof. Allen Morrison TGM 545 [email protected] 1 2 1 3 Discussion Questions 1. When you compare Lenovo’s four phases of growth, what common themes emerge? 2. What is your assessment of Lenovo’s globalization efforts? Can a Chinese tech company thrive outside China and vice-versa: can a Western tech company truly thrive inside China? 3. What is your assessment of Lenovo’s 3S strategy? Is it overly ambitious or a necessary albeit harder path forward? 4. What are the causes of Lenovo’s lower value relative to peers? What, if anything, can be done about it? 4 2  Lenovo’s 4 Phases of Growth Phase 1: Company Formation and Early Days Import and distribution of foreign laptops Introduction of innovative Chinese language keyboard Roll-out of Legend brand Focus on national distribution “on foot, by bicycle, or on a donkey cart” if necessary Focus on emerging market with few local competitors, almost no foreign competitors. In some ways: the right company at the right time Single Chinese culture, language, etc. 5 Lenovo’s 4 Phases of Growth Phase 2: Acquisition of IBM’s PC Business Buys a struggling brand Felt they had no choice if they wanted to globalize Underestimated turn-around challenges: The “Snake swallows the elephant” Painful integration process Humility: - Chinese Chairman and CEO both step aside to let the Americans run the show - Adopt English as official language By 2014 becomes the largest PC company in the world 6 3  Lenovo’s 4 Phases of Growth Phase 3: Acquisition Motorola Mobility and IBM’s x86 Server Business Expands beyond PC Both businesses are struggling Underestimated the turn-around challenges Underestimated difficulty integrating businesses Eventually, Mobility turns a profit. Servers improving. Both are still laggards. 7 Lenovo’s 4 Phases of Growth Phase 4: Building a Better Lenovo Determined to become a solution provider Launch of 3S Strategy Roll-out of complex new structure Mounting anti-globalization pressures Lagging market value relative to peers 8 4  Common Themes? Lenovo’s management is fully committed to globalization. This is particularly true for Chinese managers. Lenovo’s management believes that run-down businesses can be turned around by hard work and perseverance. If you work hard enough, great things will happen. Lenovo takes pride in following the “harder path.” More recently, Lenovo managers have demonstrated a belief that working effectively across borders (globalization) has paved the way to working effectively across business units. Lenovo’s senior Chinese managers believe in the merits of humility. They are not too proud to buy, borrow, or merge their way to innovation. Other?? 9 What is your Assessment of Lenovo’s Globalization efforts? YY frames the strategy by the 4Ss and 4Cs: [We are] “global” in the sense that we are funded by shareholders globally; we source R&D, manufacturing, parts and materials globally; we sell to customers globally, and our leadership team covers a spectrum of diverse backgrounds. [We are] “local” in the sense that we hire local talent to develop local capabilities; we hold compliance and business ethics to the highest standard everywhere we operate; we respect local cultures; and we contribute to the local community as a responsible corporate citizen. 10 5  But How Global is Lenovo? Lenovo is a global company! Gina describes Lenovo as “the most global company coming from China.” This pride permeates Lenovo’s Chinese HQ Lenovo’s most “global” activities include: Supply chain/global sourcing R&D. The company relies on three core R&D centers, each with global responsibilities: Beijing, Tokyo, and Raleigh-Durham NC. Advantages that come from these globalized activities: Access to low-cost supplies Access to low-cost labor Ability to optimize employment levels through global sub-contracting Access the highest quality and most technologically advanced suppliers, irrespective of location 11 But How Global is Lenovo? Or, is Lenovo a local company? “about 98% of Lenovo’s leaders were local and focused primarily on local issues.” - Most spend their time looking after domestic clients, channels, financing, and quality-based issues. “Lenovo” branded laptops are designed for local configuration Its mobile phones are closely tied to local service providers. Most of Lenovo’s servers are sold to smaller companies or governments—with local mindsets only Lenovo’s Think Pad was treated as a “global product” while Lenovo clearly has global products and global distribution, its operating approach is focused on local value- adding activities. 12 6  Globalization Challenges The disadvantages to Lenovo of being global are numerous: - Communication obstacles and delays when working across languages and cultures - Lenovo’s global footprint and multiple lines of businesses exposes the company to numerous risks that pop up around the world - Potential supply chain disruptions caused by political risk, natural disasters, economic “shocks” and external crises like Covid-19. Heretofore, these risks were infrequent and viewed as manageable. - Is Lenovo too American for the Chinese and too Chinese for the Americans (and others…)?? 13 Lenovo at Intersection of Globalization and 4th IR Lenovo’s Predicament Within China, Lenovo has positioned itself outside much of the Chinese tech ecosystem The government has targeted key tech giants including Huaiwei, Tencent, Alibaba, Baidu, and Xiomi etc for growth and partnerships These tech giants have created a massive ecosystem of affiliated companies that have linked mobile commerce, social media, data, on-line payments, and financial services. Two objectives: - block Western companies from deeply penetrating the Chinese market. - use collaboration to facilitate technology developments that will allow the Chinese giants to leap-frog Western competitors Taking their cues from the government, the majority of Chinese tech firms have embraced a “China-first” approach to globalization. Key: ensuring that a company’s long-term plans are beneficial to the Chinese economy and are consistent with economic policies espoused by the Chinese government. 14 7  Outside the Chinese Ecosystem Lenovo’s approach to globalization is completely different from their Chinese competitors Every one of Lenovo’s major acquisitions has been non- Chinese Their top management team comes from 20 different countries, which is unheard of amongst its Chinese peers The success of Lenovo’s 3S strategy (Smart IoT, Smart Infrastructure, Smart Verticals) depends on penetrating Chinese tech ecosystems Bottom line: Lenovo may be able to excel in China in old tech (laptops), but it may find it difficult to compete effectively in new tech because the company is too global and “not Chinese enough” But in the West, Lenovo has the disadvantage of too Chinese for some companies and many governments 15 An assessment of Lenovo’s 3S strategy (Smart IoT, Smart Infrastructure, Smart Verticals) A brave commitment to embrace the realities of the 4th industrial revolution Lenovo has invested huge sums to assemble key components: – laptops, sensors, servers, cloud-based tools, AI, and mobile devices But, with the exception of laptops, none of the pieces are state-of-the-art and individually face significant challenges Three challenges: 1. Fix each component/ensure they are world-class competitive 2. Figure out how to effectively integrate the pieces 16 8  Outside the Ecosystem A 3rd challenge for Lenovo: Most of Lenovo’s efforts to meet its 3S ambitions are being carried out largely internally and almost exclusively within China – Creating smart, industry-specific solutions is coming from its Chinese operations – This will require close cooperation with customers and idiosyncratic solutions for the particular context in China. Assuming they are successful, how will they then “globalize” these integrated products and solutions? – In the rest of the world, Lenovo is primarily focused on selling products— laptops, servers, smartphones, etc.—and not yet set up to effectively absorb and promote complex, integrated solutions that were originally designed in China for specific Chinese industry needs. 17 Complexity at Lenovo U;"VA a+VAF?"b UDbcAFDT#O d CcbAFefF;+T#FDT"b%RS"bb+Tg+ !"#A%CDEF*F+E%,-K,-LMK1%,OPL%4C%RSFT"%UA"TE"VE%WF;+ !MAf-HM@ YT!UeD;L! hFASFT%i+VAF?"b#M%c#+%?"#+#%?"T%m+% =aa@ @H#NMBC#HAA@@CB-**MAMEBCH)@BA"MA@C AACBMaNACMBC-EBMAE#NNC O#ABd#AMC hN#B*AA" HA"aAEMEB@C k 4E*A#@BA)HB)AMCgC "V+%CV+#+TA% YAEEMHB-f-BC Y)@BA"MACY 4VFTA+E%"#A+VT%UA"TE"VE%WF;+ lFASFT%mDAAD;%