Can culture have an impact on the bottom line? We’re about to show you how large that impact can be!
In May 2005, IBM sold its ThinkPad computer business to Lenovo Group Ltd., a Chinese manufacturer of personal computers that previously had sold only in China. Immediately upon the acquisition ofthe ThinkPad, Lenovo, which had purchased the business for over a billion dollars, was thrust into the global scene in a big way. Thinking it needed to address its new market to enhance sales, Lenovo brought in Western managers and tried to remake itself culturally overnight.
A quintessential Chinese company that led its workers in twicedaily calisthenics, Lenovo felt compelled to adopt English as the official company language and hired its new chief executive officer from Dell Computer Corporation. Regardless of the intent, instead of a confluence of cultures, there were immediate riptides and floods. The Americans were frustrated by the Chinese need for harmony and inability to make public statements that showed disagreement. The Americans misinterpreted this as lack of engagement and inability to add value. In an attempt to streamline operations, the American management cut 10 percent of the company’s global workforce andshifted the marketing headquarters to Bangalore, India. This was
especially threatening to Lenovo because it was a company that took great pride in being essentially Chinese. Then, because things weren’t moving quickly enough, the American CEO replaced a popular Chinese executive with someone from the United States. That caused
a tidal wave of discord, and other key Chinese executives quit in protest, saying that they could see they weren’t valued.
Chen Shaopeng, president of Lenovo’s China operations, said: “When we disagreed in meetings we kept silent, but Americans assumed we were agreeing.”
The loquacious Americans talked so much that the Chinese felt the Americans didn’t give them space to express themselves. What was the bottom-line impact? The company had serious problems that hurt it in the marketplace.Market share dropped from 7.8 percent to 7.3 percent at a time when the rest of the market was growing.
However, the story doesn’t end there.Bill Amelio,Lenovo’s American CEO, pointed out in a 2008 interview, “Lenovo’s Chinese heritage is a very strong part of our global DNA. . . . Our basic challenge is to take that diversity and make it work for us as a competitive weapon.”
To Lenovo’s credit, the desire to make its global diversity a competitive advantage is reflected in the company’s eschewal of a single headquarters. Amelio is based in Singapore; the company’s chairman,a Chinese national, is based in Raleigh,North Carolina; and world headquarters are in Raleigh, Singapore,Paris, and Beijing with research and development labs scattered globally as well as in Yamato, Japan.
In other words, having learned from its earlier mistakes, Lenovo is in the process of making itself a truly global corporation that does what Amelio calls “worldsourcing—where we source talent,manufacturing, and markets from whichever location in the world it makes the most sense.”
As we will learn throughout this book, it takes more than sourcing to make global diversity a competitive advantage. It takes skill to enable that talent to overcome the cultural challenges it will encounter and elicit the special qualities each individual can contribute.
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