Lenovo’s Legend Returns..doc

1、Lenovos Legend Returns.Liu Chuanzhi built Chinas first global computer company. Now hes rebuilding it.As Chinas economy gains ever greater global influence, its major corporations dream of conquering international markets. Liu Chuanzhi and Lenovo have been at the forefront of that quest. With Liu at

2、 the helm, Lenovo became Chinas first truly multinational corporation after its $1.75 billion acquisition of IBMs famed PC unit in 2005. When the deal closed, Liu gave up the chairman job and let the new Sino-American leadership team take over.The acquisition, it turned out, was the easy part. Lenov

3、o eventually became entangled in a struggle over the combined companys managerial culture. The internecine intrigue would prove costly. Lenovos market share stagnated because the company wasnt adapting to new trends in personal computing.Lenovos problems are a looming challenge for corporate China i

4、n general. Since few Chinese executives have had meaningful experience operating outside the country, transforming their global aspirations into reality will be a difficult task. “Going global is going to be a big, big issue for Chinese companies,” says James McGregor, senior counselor for consultin

5、g firm APCO Worldwide in Beijing.Liu, 66, intends to fix all that. After four years on the sidelines, he took back control of Lenovos management last year from its command-control American CEO and recast Lenovo as a global company with a consensus-style Chinese management structure. If that wasnt da

6、unting enough, Liu has set his sights on another grand undertaking, to create an industrial conglomerate in China. His game plan: to pass the lessons learned over his career to a new generation of Chinese CEOs and upgrade corporate management in the country. In the future, Chinas “potential will be

7、driven by companies and their people,” Liu says. “What well do is help the top management to improve.”He is already the wise man of Chinese private enterprise, a soft-spoken but relentlessly competitive entrepreneur who built a small start-up housed in a dusty, two-room Beijing guardhouse into China

8、s dominant PC maker, with about a third of the rapidly growing market.Since its birth in 1984, Lenovo has been one great management experiment, as Liu guided the company by trial and error through the rapid swings and shifts of Chinas economy. Though Lenovo was initially funded by the Chinese Academ

9、y of Sciences, a state institute where Liu worked as a researcher, he feared his start-up would become a bloated government behemoth and insisted that bureaucrats have no say in management, a bold stance in the very early days of Chinas market reforms. In the late 1980s, when Liu wished to manufactu

10、re his own PCs, he dodged an obstructionist communist bureaucracy by locating his first factory in more liberal Hong Kong. When Chinas computer market was opened wide to foreign competitors in the 1990s, Liu outmaneuvered them by launching a series of low-cost, high-quality mass-market PCs.Back in 2

11、003, Liu and his management team came to the crucial conclusion that Lenovo had no future as merely a Chinese outfit, no matter how big its home market was becoming. Scale mattered global scale so Lenovo had to expand its overseas operations. That thinking led to the acquisition of IBMs PC unit, whi

12、ch instantly gave Lenovo a worldwide presence and, perhaps more important, extensive foreign expertise in the form of IBMs executive team.Liu wisely accepted that his Chinese colleagues were not prepared to run a global corporation by themselves, and he integrated the IBM veterans into the companys

13、senior ranks. The first postacquisition CEO was an IBMer. Then in late 2005, Lenovo appointed an American executive from Dell, William Amelio. Lenovos official language became English. Liu stepped aside, resigning as the companys chairman (though he remained a director). “I might not have had enough

14、 energy to take care of such a big business,” he once said of his departure. Liu offered his guidance, but the new, very international team floundered.Lenovo has been buffeted by culture clashes at its highest levels, which have hampered efforts at correcting the firms major deficiencies. The bigges

15、t was inherited with the IBM business. Big Blue was focused on big customers, since they were the source of big orders. It was a logical large-corporation alignment. But in continuing it, Lenovo was missing out on the faster-growing segments of the PC market small businesses and consumers.After the

16、deal, Lenovo set out to make the IBM business look more like the companys business inside China, where it competes in every market category with a wide product line. But that plan barely got off the ground. New consumer products were poorly conceived and never caught on. At the time of the IBM acqui

17、sition, Lenovo became the worlds third largest PC maker, but it has since slipped to fourth place, with 8.8% of the global PC market, according to research firm IDC. “The top management understood the problem, but we failed to take action,” Liu says. “It was a question whether the management of Leno

18、vo had the long-term perspective.”Liu started to get especially worried in late 2008, as the worst of the financial crisis bit into computer sales. Lenovo swung into the red, posting a $97 million loss for the quarter ending December 2008. He began seriously considering a return to management. “Leno

19、vo is all of my life,” he says. “When it looked like my life was threatened, I had to come out to defend it.” His return was made official in February 2009. An old protg, Yang Yuanqing, vacated the chairmanship for him and returned to the CEO post, which he had held before the IBM deal. Amelio, whos

20、e contract had ended, was out.Fix Lenovo, Liu determined, required fundamental reform. Factions had organized in the companys top echelons among the original Chinese managers, the IBM old guard and new executives imported by Amelio which loosened the teams cohesion. But Lius biggest concern was that

21、 the rapid changes Lenovo had made in its culture after the IBM acquisition were undermining the effectiveness of its management. He believed Lenovo had to get back to its roots. Liu “was worried about losing that culture that had been such an important part of Lenovos success,” says James Coulter,

22、one of the founders of private-equity giant TPG Capital and a Lenovo board member.Liu calls that culture the “Lenovo way.” At its heart, Lius system is based on a collective decisionmaking process in which the CEO develops and implements strategy as part of tight-knit group of executives. Liu contra

23、sts the Lenovo way with what he sees as the “classic MBA way,” in which a dominant CEO makes decisions more independently, then works with the individual chiefs of the business units to execute them. Describing his system as forged by the trials of building Lenovo, Liu refutes that its culturally Ch

24、inese, although consensus-based management is common in many Asian firms. “We are not just following any menu,” he says.Liu wont go so far as to say the Lenovo way is superior to Western management practices, but he sees it as an alternative perhaps one better suited to certain cases, like Lenovos,

25、in which the management team is Sino-global. “The Lenovo way of decisionmaking is more prudent and more thorough,” Liu says.He faults former CEO Amelio for using the top-down management system. “Amelios approach was the classic methodology in MBA textbooks,” Liu says. “But Bill was facing a very com

26、plicated situation where there are different teams from different cultures and nations in Lenovos management. Using the classic approach, it was very hard to really mobilize or motivate these teams to achieve goals.” On his return, Liu narrowed the senior management team down to an eight-member exec

27、utive committee that meets regularly to discuss strategy and plan its execution.Amelio sees the changeover differently, as a kind of graduation for the Chinese manager. When the IBM unit was acquired, Amelio says, its managers were not prepared to handle a global enterprise. After Amelios three year

28、s at the helm, they had learned a lot. Lius goal in altering the management system, Amelio says, was to give the Chinese executives greater say in the companys affairs: “The Chinese team was able to pick up its skills and manage in other countries.” He also defends his performance, saying he put in

29、place the proper strategy. “I stand by my record,” he says.Lius new management structure seems to have energized Lenovo although a rebounding economy didnt hurt either. “The good news is, right now, theyre in a good place,” says William Grabe, a managing director at private-equity firm General Atlan

30、tic and a member of Lenovos board. Wong Wai-ming, Lenovos chief financial officer, says Lius reforms have enhanced discussion among the senior executives and heightened the commitment among their subordinated. “Strategy wise, there is a lot more clarity,” he says.Thats shown up in a flurry of recent

31、 initiatives. Realizing how the PC and mobile phone businesses are converging, Lenovo in November repurchased a Chinese handset maker it had sold less than two years earlier. The company is also launching a slew of new products. Tapping into the growing demand for smaller machines, Lenovo this year

32、introduced ThinkPad Edge, a line of light, powerful notebooks aimed at the small-business market, at a starting price of only $579 in the U.S. In May, Lenovo will begin marketing the Skylight smartbook a cross between a mini-PC and a smart phone and later the unique IdeaPad U1 hybrid, a notebook wit

33、h a detachable screen that acts as a stand-alone tablet, much like an Apple iPad. “They are trying to push themselves ahead of the curve,” says Bryan Ma, a computer-industry analyst at IDC in Singapore, of Lenovos new products.Liu believes the Lenovo way can be the path for other Chinese firms as we

34、ll. He intends to transform Legend Holdings an investment firm that is Lenovos largest shareholder into a holding company, which, through acquisitions, would collect a stable of firms in industries such as energy, biopharmaceuticals, information technology and environmental protection. Then Liu and

35、Legend would work with executives at the acquired companies to help them raise capital, strengthen strategic planning and improve everything from supply-chain management to human-resources practices. “For the Chinese economy to really rise, one of the key drivers will be capital from the private sec

36、tor,” Liu says. “We can find and identify the best people and use our funds and our experience to help them so their companies will grow very fast.”Lenovo, however, may remain Lius biggest test. The company returned to profitability in the second half of 2009, and it is aggressively pushing into eme

37、rging markets, where, by using its experience in China, managers believe they might hold a special advantage. Lenovos PC shipments surged 58% last quarter from the same period a year earlier, while the total market grew 24%, according to IDC.Come back after Lenovo posts more results, Liu says, and “you could say at that time the Lenovo method works.” Wong, the CFO, expresses greater optimism. “Mr. Liu learned the hard way,” he says. “This is the way he survived, and he won.” For the sake of corporate China, Liu must keep winning.