Lenovo’s Strategy 2011

by ayd

This article is a summary of Fast Company’s article “Protect and Attack: Lenovo’s New Strategy“.

Facts about Lenovo:

  • For the past two years, Lenovo has been the fastest-growing company in the PC industry.
  • It sold a record 13.5% of PCs worldwide, leapfrogging Dell and Acer to seize the No. 2 spot.
  • Lenovo founder Liu Chuanzhi, a survivor of China’s brutal Cultural Revolution, still turns to Chairman Mao’s Little Red Book for inspiration.
  • It is a product of Communist China (the government still owns 36% of its parent, Legend Holdings).
  • In 1996, Lenovo was the first to offer Pentium based chips in China, for a lower price than those of their competitors slower PC’s.
  • By 1997, Lenovo was China’s top-selling PC maker, a position it still holds.
  • In 2005, Lenovo bought IBM‘s PC division along with the Thinkpad brand rights for $1.75 billion.
  • Never having had any multicultural experiences the Chairman and CEO let IBM staff take over the new corporation.
  • The Americans couldn’t bridge the culture gap with Beijing, and during four difficult years of cost cutting, morale plunged.
  • The 2008 financial crisis devastated Lenovo’s enterprise business, the company posted a $226 million loss.
  • In 2009, Chairman Yang and CEO Liu reclaimed their previous roles, and Yang launched his protect-and-attack strategy to forge a return to profitability.
  • In 2011, Lenovo launched its largest-ever branding campaign, aiming to become the first global consumer brand to emerge from China.
  • It boasts an international workforce of 27,000 employees and customers in more than 160 countries.
  • It ranked No. 1 in the 2011 Computer Reliability Report, ahead of Apple and HP.

Lenovo CEO Yang Yuanqing calls Lenovo’s strategy “protect and attack”. Lenovo seeks to protect its core business–the China and enterprise (large-scale commercial and public-sector) markets, which generated about 70% of its $21 billion in revenue last year. On the attack side, he’s pumping Lenovo’s profits–$273 million in 2010–into emerging markets, new product categories (tablets, smartphones, smart TVs), and, of course, the U.S.

Operations

Lenovo has concentrated very strongly on its operations its has slashed delivery times to Dubai from 8 to 4 weeks by building a new distribution centre. Its inventory is kept to as little as 5 weeks inventory. Product development times are fast with the LePhone taking less than 6-months to develop. This is part due to a leaner management structure of 9 senior leaders as compared to the 24 leaders it had at one point, this has increased the decision-making speed to make changes.

Self-Improvement

While Lenovo seeks to move fast with decision, its also seeks to deliberately slow down the thought process which goes into making decision. Chairman Liu emphasised a concept called fu pan. It means “replaying the chess board.” The idea is to examine your every move to improve the next time. Lenovo trains its managers in fu pan, which can entail short reviews of an incident from that workday or a far more in-depth process.

Management

With 9 senior leaders based in 6 different cities in 3 continents, with multiple cultures present, they seek to meet  bi-monthly to review the business. They meet on location in key markets, spending 3-4 days visiting local buyers, suppliers, partners and customers. Recently, at a meeting of the top-100 CEO Yang was seen acting as coach rallying his troops with a pep talk. This is part of a greater plan to build company unity in a multi-cultural work environment where the success of the firm depends on integrating the perspective and talent of all the employees.

Marketing

David Roman the new CMO states that the challenge with Lenovo today is “isn’t changing consumers’ perception of a brand. It’s introducing a brand and having it resonate.” For this they have launched the new global campaign “Lenovo: For those who do” which seeks to emphasise his machines in a similar way to Nike’s “Just do it” campaign.

 

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