Theme 1: Lenovo and Leadership
Lenovo Group Ltd. is a Chinese multinational company in personal computing business. It was established in Beijing, China in 1984, and acquired IBM’s personal computing department in 2005, which served as the first step of Lenovo to go global. In 2014, Lenovo has become the largest personal computer vendor in the world in terms of unit sales. How can Lenovo make such accomplishment after just three decades? Primarily the credit should be given to its successful leadership.
Considering leadership, both Chuanzhi Liu, the founder of Lenovo, and Yuanqing Yang, current chief executive officer of Lenovo, have made undeniable contributions to the development of Lenovo. In different phrases of Lenovo’s development, although Mr. Liu and Mr. Yang guided Lenovo with different leadership styles, they behaved exactly according to the real situation and thus Lenovo could progress confronted with the changeable market and increasing global competition.
As an EMM (Enterprise mobility management) company, Lenovo also consistently works on facilitating the use of mobile devices, wireless network and other mobile computing devices. From Chuanzhi Liu to that of Yuanqing Yang, their core value stays while operating methods may differ.
The leadership style of Chuanzhi Liu is more authoritative, decisive and forward-looking. After graduation Mr. Liu started to work as a computer scientist in Chinese Academy of Sciences, but that job could neither provide enough financial support to raise his family, nor could it put his research results into practice. Thus, he decided to found Legend with ten other engineers. However, in the 1980s, the Chinese economy was still under strict planning. Although the initial funding of Legend, 200,000 Yuan, was borrowed from Mr. Liu’s superiors, he still insisted that he should have control of the company’s finance, employment and decision-making and eventually the proposal was approved. Thus, Legend could be operated like a private enterprise instead of a state-owned institution. It is Mr. Liu’s perseverance that leads Legend to gain autonomy in the very beginning.
In addition, Chuanzhi Liu has the insight to figure out the flaw of products of foreign competitors and takes full advantage of Legend’s strength. At that time, the strongest merit Legend had was a good understanding of the Chinese market and culture (Biediger et al. 2005). Therefore, they concentrated on innovating an input mechanism, such as a keyboard with Chinese characters, designed based on Chinese people’s preferences. As a result, the market share of the company was raised to 30%.
Last but not least, Chuanzhi Liu could identify talents and promoted them properly. Yuanqing Yang, for instance, got the attention of Mr. Liu and was appointed the head of Lenovo’s personal computer business when he was just 29 years old. In 2011, Liu also recommended Yang to be the CEO of Lenovo. Liu once said he has observed Yang for a long time and found him innovative, progressive, straightforward and trustworthy.
Yuanqing Yang was the person who led Lenovo to build international brand recognition and completed the acquisition of IBM’s personal computing division. As the first Chinese IT company to go global, it was definitely a challenge. However, Yang succeeded in transforming Lenovo.
First of all, Yang has built a new diversified board after acquiring IBM’s personal computing business. The board members all embraced the common vision and only one third of them are from Chinese Mainland, while the rest members are from Hong Kong and the United States. Furthermore, in 2013, the top 14 executives of Lenovo came from seven countries. Besides, Yang abandoned the formal titles between managers and employees and required them to call each other by their given names just like the situation in foreign enterprises. In this way, Yang tried to change the traditional Chinese cultural applications in Lenovo and built an atmosphere of transparency and equity. Furthermore, Yang also implemented a performance evaluation system, which stimulated both managers and employees’ motivation and senses of responsibility. All in all, Yang has asserted to the world that the new Lenovo was global and open to world.
In a nutshell, the leadership of Lenovo is successful by far. The insistence and insight of Chuanzhi Liu and broad mindedness of Yuanqing Yang pushes the development of Lenovo to a new phase respectively. It is also crucial to know that leadership needs change as well once the outside environment alters. In an age of globalization, leaders shall improve their leadership competencies and know how to attract, train and put talents in the right place.
Theme 2: Lenovo and Culture
After acquisition of IBM’s personal computing business, the company decided to take Morrisville, North Carolina, the United States, the former location of IBM’s PC department, as the other headquarter of Lenovo. The coexistence of these two headquarters represents diversity in Lenovo’s culture. According to Convers (2014), Lenovo was inclined to adopt a global-local business model. To be more specific, Lenovo tended to hire talents in the local place and train them in global thinking and acting. In addition, such diverse culture also contributes to the establishment of creative atmosphere in Lenovo.
Mr. Liu owned the success of Lenovo to the emphasis of motivating human resources in a diversified culture. Although different cultural backgrounds in a company may cause problems, its benefits usually outweigh negative impacts. In terms of ideology, China is communist and the United States is capitalist. The difference could result in various market conditions, disparate living habits of citizens and diverse world and work values. If the acquirer forces the seller to transform the organizational system into a totally different type, the talents of the acquired business may choose to leave and the newcomers might not be familiar with the actual situation. The result probably turns out an acquisition failure. However, it is also beneficial and productive to have diverse culture coexist harmoniously.
The experience of Gina Qiao, the vice president of human resources in Lenovo, is a good manifestation. Qiao is a Chinese. When she first attended the meeting of the company in the United States, she had a lot of ideas to put forward. However, the discussion was so heated that she found no space to jump in. Until the presiding person of the meeting asked whether there was another idea, she finally raised her hand and started to talk. After the meeting, a foreign colleague told her it was natural to speak out her own opinions without taking it as an aggressive action. After several months, Qiao was accustomed to this active type of communication at meetings, where the exchange and collision of views sparks innovations. She concluded that although it might cost longer time to make decisions in a diversified culture, the quality of final decision was better, because problems could be perceived from different angles and the pro and con of solutions could be better weighed (Halzack, 2013).
Lenovo’s characteristic of diversity in culture enables its employees to have more exchanges with those from different backgrounds, which inspires creativity in a team (Conyers, 2015). Lenovo was founded with the initial brand name of “Legend”, and “Legend” was too frequently used in business worldwide. It was not easy to be registered as a trademark. Thus, Yuanqing Yang decided to change the brand name. “Le-” is inherited from “Legend” and “novo” is a Latin ablative of “new”, which implies innovation. In 2015, Lenovo proposed a new slogan of “Innovation never stands still” while promoting its new logo in Beijing. It could be seen that innovation has become one of the core values in corporate cultures for Lenovo.
Just like innovation is one of the common features in corporate cultures, Lenovo has also strived all the time to develop a core value to help its staff walk in the same right way. The common principles are called “the Lenovo Way”, which can be fully reflected in the words: We do what we say and we own what we do (Lorenz, 2012). Those principles instructed personnel’s daily work and help them to improve themselves everyday.
Lenovo is also a people-oriented company. Chuanzhi Liu once recalled that in the early establishment of Lenovo, he used a lot of yelling to leader the team. The current chairman Yuanqing Yang brought performance-based evaluation into the company system. The performance of managers and employees is closely linked with the rewards they can get. In this way, staff could be pushed unconsciously and become more and more active in making profit for the company. Nowadays, it is time to regulate in a more advance way. Besides conventional reward system that links work with payment in cash, Lenovo treasures talents and chooses to motivate its employees by stock options, which could help increase performance and decrease the cost of management. This method is also of great influence in terms of attracting more professionals.
All in all, the leadership of Lenovo by Chuanzhi Liu and Yuanqing Yang has been a success by far. Although their leadership styles differ, the most important thing is the leadership works out for the development of Lenovo.
Theme 3: Lenovo and Corporate social responsibility
As a member of the United Nations Global Compact, Lenovo has been acting in line with the ten principles to better fulfill its corporate social responsibility (CSR). According to Lenovo (China) corporate social responsibility report 2013/14, Lenovo has built an integrated system of CSR and unites the efforts of stakeholders to work on a better life from those six aspects: environment, society, customers, employees, partner and investor. For each aspect, there is one specific aim.
First of all, Lenovo aims at spreading more love in the society by making contribution to eliminating the digital gap, promoting education, helping poverty mitigation and disaster alleviation, and facilitating culture and environmental protection. In the above five fields, Lenovo has achieved certain goals and succeeded in carrying out its duties under its promises. For instance, Lenovo ranked the third when evaluating the World’s most admired companies in the computers industry. Also, Lenovo spent 38 million RMB Yuan on supporting charity industry in 2013. In 2008, Lenovo (China) Volunteers Association (LCVA) was organized on the voluntary participation principle and employees were encouraged to engage in social-welfare activities. Last but not least, vulnerable social groups, such as victims of natural disasters and rural people struck in poverty for a long time, have been receiving help from the company. For example, in April 20th, 2013, an earthquake occurred in Sichuan province and caused great damage to the local people’s lives. Lenovo built an emergency aid team promptly and sent relief supplies to the victims soon after the disaster took place. Besides, Lenovo Chengdu IT service offered three free services to victims, including Internet connections and free calls with Lenovo’s phones. To relieve the mental trauma of some victims, employee assistance program was called upon and the participants could receive training before facing those poor victims.
In terms of environment, Lenovo adopts four main methods to address existing environmental problems. The first one comes from the subjective engagement of employees under the support of Lenovo. “Environment Week” was arranged annually by inviting some environmentally protection organizations to teach employees how to turn trash to treasure, namely green DIY. Secondly, to tackle the climate change, Lenovo started to record its greenhouse gas emission and examined the situation with different scopes. Thirdly, Lenovo tends to use recyclable and low-halogen materials in production, and attaches great importance to the improvement of the energy–efficiency of its products. Fourthly, the product end-of-life management is implemented and many parts or auxiliaries of products have been reused, recovered and disposed. From 2005 to 2013, more than 120,000 tons of computer-related materials have been dealt with under product end-of-life management. Meanwhile, product package, waste management and water source management are also carried out to protect the environment.
Lenovo also pays attention to the situation of employees under the UNGC policies. The mental health of employees is taken care of by Lenovo, which often holds various recreational activities like basketball games and forums to promote communication among employees and enrich their lives. As for customers, Lenovo wants to provide better user experience. In 2013-2014, 3175 new patents are applied to improve the existing software and quality of products is greatly emphasized. When it comes to investors, the ultimate goal of more profit is required. At last, Lenovo tends to establish a win-win strategy with its partner for a long-term basis.
According to Ladousse (2009), Lenovo as a new world enterprise, innovative and forward methods should be applied to address the CSR and diversity issues. To further enlarge its positive influence, Lenovo focused on sports sponsorship. In 2006 Winter Olympics in Torino and 2008 Beijing Summer Olympics, Lenovo provided a range of various high-technological support and showed to the world its advanced technology and capability in innovations.
All in all, Lenovo has fulfilled its CSR quite well in terms of society, environment, and treatment of employees, investors and partners. In an era of globalization, CSR can also be a good method of promotion by stamping its products with positive images. The, reputation and profit can both gained when corporate social responsibility is fulfilled well.
Distinctive Features of Lenovoas an Emerging Market Multinational Enterprise from Asia
Nowadays, Lenovo has become one of the largest personal computing multinational companies in the world. However, before the acquisition of IBM’s PC business, Lenovo only concentrated on the Chinese market. In the process of Lenovo’s going global, China has undergone the transition from a planned economy to a socialist market economy. Companies under control of the state have a hierarchy organizational structure just like the one in the government (Redding, Bond & Witt, 2012), and many private companies are run by families that also stress order and obedience. Therefore, the transition into modern management and the adoption to western management styles can be painful for many Chinese enterprises. As the first Chinese IT enterprise to manage an American company, the practices of Lenovo are worth learning considering leadership, culture and CSR.
First and foremost, it is necessary to have a basic knowledge of Asian business models first. Witt & Redding (2013) claimed that family ownership dominated in most Asian firms, which served as the foundation of state ownership. Such firms were usually hierarchical and the right of decision-making lied in the control of the chief executive or the board members. Except the top management, other staff in the organization just needed to fulfill the instructions or orders given from the CEO or the board. Thus, Asian cultures are more collectivist and emphasize on the whole regulation (Zhang & Wu 2014)). Promotion largely relied on relationships and seniority, which means the time you spent in the company.
In terms of the Chinese culture in business contexts, collectivism and Guanxi (relationship or connections in English) can interpret part of Chinese culture. Taking the supply chain management for an example, the concept of Guanxi in supply chain management is tacit in China. Those relationships could base on ties of blood, long-term cooperation or bribery. Bribery in China is often tactfully expressed like this: smooth the relations. To some extent, Guanxi is more of a reflection of the lack of authority of law in governing.
However, it is not easy to describe culture in a specific word. Thus, to compare national culture, five measurements are introduced: power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity, and long-term orientation.
First of all, talents-oriented promotion in leadership helps Lenovo go further and faster in its globalization. The leadership of Lenovo is quite different from conventional Chinese leadership style. First of all, the selection method of successor is different. Chinese firms are mostly family owned or state owned at that time. Family owned company tends to choose one of the family members to inherit the company. If it is state-owned company, the selection depends largely on the seniority. The promotion in traditional Chinese companies should also require many procedures. When Chuanzhi Liu identified the talents of Yuanqing Yang, he promoted Yang to be head of personal computing business and later appointed Yang to be the next CEO of Lenovo.
The second distinctive feature lies in the compromise in leadership positions. In Chinese culture, the one in leader position is always perceived as having absolute authority over his/her subordinate. However, as the acquirer of IBM PC division, Yuanqing Yang did not try to transform IBM PC division into the Chinese operation style. He negotiated with the original CEO, Steve Ward, and agreed three principles of candor, respect and compromise for the purpose of persuading the talents in IBM PC division to stay.
Compared to the traditional Chinese culture in business context, Lenovo’s diversity, innovation, people-oriented and performance-based evaluation are more suitable for a Chinese company to go global. In traditional Chinese companies, whether state-owned or private, the hierarchical system exists all the time. One should show respect for managers or boss and it is not polite to call them by their given name. Strict rules and regulations severely hinder the creativity of employees. Talents are not paid much attention and employees get fixed salaries whatever the performance turns out good or bad. However, Lenovo takes human resources as invaluable and talents can be promoted according to their excellent performances. Its diverse cultural environment contributes to the innovation process, which is the core competitive edge in marketing.
CSR is more of a channel for multinational companies to promote their international brands. It is common that companies may add some environmentally friendly way in the production of products, and in turn their products can be granted as environmentally friendly. Once a multinational companies sponsor Olympic games, it is valuable to connect the core value of its brand to the sporting spirits.
In a nutshell, when a Chinese company wants to go global, it is advisable to abandon some conventional business behaviors in the Chinese culture. Firstly, openness to diversity is recommended, instead of strict rules and regulations. Besides, talent-oriented promotion should be taken into account because talents are the core competitive power in globalization.
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