Whenwe talk about change, is it necessarily a good thing? Some often perceive changeto be always for the greater good and some advocates change as a good thing.But the question is, are those, always right? Change is often inevitable. It isthe only way in which we need to adapt and anticipate so as to improveourselves.
Some way or another we are constantly changing. We grow. We age. Andalongside with this, our mentality and lifestyle changes. “Was the game we usedto find amusing when we were 10 years old still appears gives us the similarthrill or experience when we are 30? “Are we still as active and agile as weage being able to perform those acrobatic movements that we were able to dobefore?” These are some of the questions we can ask ourselves if we thinkchange does not simply happen.Whiletechnology advances and reinvents each day, not all are willing to relinquishthese changes caused by these technological impacts. Reluctance to change isfairly normal yet a destructive thing.
In some cases when managers orstakeholders fail to realize the possible consequences of change such as lowmorale/lowered productivity, conflict, mistakes, would lead to significantimpact to the organization itself. Thus, stake holders often need to askthemselves “By implementing these changes, what additional value do I bring tomy customers, employees and other stakeholders involved?”. Living in a globalfast-paced global environment, businesses, be it big or small is often hit bythe intervention of the need to change.When we talk aboutchange, what comprises of it? Changes such as brand identity, product image, companylogo and slogan may seem to be minor to stakeholders, but in most cases, itwill impact end users on how they perceive the product or services. However, largescale change such as organizational change, acquisition or collaboration ofcompanies is often a complex and lengthy process. These kinds of changes often hasa major impact to the many aspects of the business entity and one is requiredto keep changes under control while supporting these changes to transform thebusiness.
One of which that occurred in the past decade was the acquisition ofIBM by Lenovo. It was referred as a “snake eating an elephant”. I will first mentionabout how IBM rose to success through change as well as how the resistant tochange to adapt was one of their major pitfall. After which, I will focus aboutthe vast change that Lenovo had to readjust in terms of their organization structure,goals and vision when they acquired IBM in 2005. Being one of the pioneer inthe PC industry, it was a huge move for a company to sell its business toLenovo for 1.75 billion especially with its roaring success in the 1980s withmajority of equity of the company was indirectly coming from that line of sales.What made IBM PC so successful back then was mainly due to the fact that theIBM PC had a highly modular design and as such, graphics hardware or storagetechnology could be easily inserted if an upgrade was needed.
It was the firstPC back then in the market that was able to do this in comparison to the PCsuch as the Atari 800 which was designedand built as a highly integrated personal computer. What this meant to theconsumers as such is that they are given the flexibility to upgrade theirsystems whenever needed. In addition, with its huge reputationthat IBM established over the years, consumers were more inclined to trust theproduct with being such a huge organization backing it up. What led to theirdownfall and later, a full acquisition of the PC sector by Lenovo was more of astrategic move according to Ex-IBM CEO Samuel Palmisano. He mentioned that IBM’s personal computing business had minimal room forinnovation. This was alongside with Lenovo’s perfect location which will allowIBM to gain exposure in mainland China where it hopes to establish its namewithin the country’s lucrative market.
Little thoughts goes to the team of 12 when they built thatrevolutionary computer system in XXXX. They did not expect that this would change the futureof the computing world and as such they released the full details of theimplementation and design as an open-source license giving other manufacturersa “reference design” that they could start off with. This herald the eventualdemise of IBM’s PC industry giving rise to clones. Who would have known that an open architecture, purely forresearch purposes invited companies to make knock-offs, thus allowing lowerprices personal computers to dominate the industry? However, this will beanother story on its own. With its humblebeginning, Liangxiang’s (later known as Lenovo in 2002) root to success in the early stages wasto be able to identify the problem and seize the opportunity. As computers in itsfounding years were predominantly dominated by IBM, with majority of them operatingin English, their most important initial achievement was to be able to recognizethat developing Chinese character computer system will allow Chinese consumers toenter to the computing age. As a result, they leverage on importing variousforeign branded computer and installed this Chinese character function andbegan supplying to China’s domestic market.
They began exploring and venturinginto various aspect of the technological industry with their core vision of”Innovation never stand stills”. The company’s change strategy in theacquisition of IBM’s person computer division in 2005 reflected the goals ofLenovo’s leadership to gain access to the international marketspace, but it islikely that few observers would have expected such an aggressive tactic fromthis up-and-corner. This was done in response to increasing market demand forstate-of-the-art personal computers at home and abroad. Its unprecedentedacquisition represented a major step for the company as well as a majorincentive for Chinese industry across the board. This acquisition wasproof-positive that Chinese companies are not only capable of being competitivein their domestic market but can also compete at a global level. After thecorporate merger, Lenovo had to formulate a company-wide strategy and businessmodel that would take the company in the right direction according to the dualgoals of increasing its domestic market shares while simultaneously gaining theincreased access to the international marketspace. To this end, Lenovodeveloped a new business model that tackles the concerns and the changes theyare required to transmute in order to go global with the key objective of beingthe world’s largest PC maker. Yang Yuanqing, current chief executive officer ofLenovo used his knowledge garnered through his earlier career as a salesman andpromoted his “dual business model” strategy.
This strategy is to achieve thegoals of both the enterprise market and the consumer market. The relationshipmodel that targets the enterprise market will be based on offering customizedofferings and services to meet the needs of the larger enterprise customers. Onthe other hand, the transaction model that targets the consumer market will usea more efficient and reliable value chain, strong demand generation onattractive offerings, and the ability to adjust to market changes and outshinetheir strongest competitor such as Dell while delivering the new Lenovoproducts on a global scale. However, implementing any business model do comeswith issues.
Issues such as language barrier, safety standards, feasibility andoverhead cost of employing talented workers needs to be considered in everyphase of delivering a good quality product to the end users. Due to thesedifficulties, Dell and IBM did not leverage much on transactional consumer incomparison to Lenovo, seeing that this widen ups a vast amount of opportunitiesin expending their business entity. One of their biggest andbold investment was buying over IBM’s vaunted PC business. According to Lenovo’s newsroom portal, themerger will approximately add 10,000 current IBM employees of which more than40 percent of whom already are in China and less than 25 percent of whom are inthe United States will be joining Lenovo. Of which, the first concern wasto coax the top execs from the US based firm to integrate into their company’sculture and vision. This is followed by ensuring that cultural hybridization betweenthe East and the West takes place. As miscommunication between the newemployees from IBM and the current employees from Lenovo could spell a major disasterfrom within.
Whenever a company merges,the main problem for business owners will always be on how to retain their existingcorporate customers as well as any other consumers who bought their product.The Chinese management team place great deal of trust on Steve Ward, thearchitect from IBM’s side, whose main responsibility was retaining IBM’s majorcustomer in lights of the merger between the 2 companies. Developing a commonstrategic alliance that takes advantages of both company’s core competency willbe one of the litmus test of Lenovo’s management savvy after this majortakeover. With technology playing a vital role in the economy andglobalization, companies must move and adapt to it. With these inevitabledisruptions, one must ensure that meeting the customer’s need was the ultimategoal. Customers simply doesn’t care about what was achieved and how it is done.What matters to them most was delivering a better value product at acompetitive price and this is the driving factor of a price war betweencompanies.
What Lenovo did back then was focusing too much on customers butleft little emphasis on their employee’s well-being and their ability to beable to adapt to such changes. And as such, according to an article from, the company reported losses of 226 millionU.S. dollars for the financial year 2008 ended March 31, 2009. And this ismainly due to management issues and cultural collision between the 2technological giants. Yang mentioned that culturalintegration was their key factor of their eventual success and there were onlya few companies that can connect with the West in terms of technologicalmanagement and culture itself.
To curb this underlying issue of Chineseculture dominating the Westerns’, there has been a few solutions that ChairmanYang decides to impose in response to resolve it. One of which was the practiceof addressing other employees by their first names instead of their title. Withthese titles, employee often feel that there is a hierarchy and thus limits thelevel of creativity as they often feel that they are expected to respect theirseniors and are afraid to voice out their honest opinions. With employees coming from differentcountries, background and language barrier between the Easterners andWesterners, often these problems bred misunderstandings amongst the employeeswhen working with one another, thus hampering trust and the ability to build anew culture. Another concern to address by Chairman Yang was the differencein meeting style between IBM and Lenovo.
American style of presenter meetingusually settles any impediments or issues beforehand so that the actual meetingwill be presented cleanly and smoothly, whereas in China, this kind ofpractices were fairly new, as most of their meeting was to settle the issuesthru the discussion itself. To curb that, general rule like talking slowly andvoicing out opinion has been imposed. Generally, this aids in avoiding anymisunderstanding and individuals will be more understanding towards each other.
Through these, employees were working together in an open – minded culture withtrust between one another as well as the company being established. Naturally,Lenovo was predominately Chinese dominated. As such integration of a newculture definitely post a huge problem. This gave way to issues where IBM’s employeetend to feel that the culture itself is strange and those who did not adapt toyou soon left. According to a former employee, most of the Lenovo staff wereyoung and few speaks English.
In addition, rarely any managers had anyinternational business experience or overseas exposure. The way the company wasstructured was very militaristic. Whenever staff who were late for themeetings, they were tasked to stand behind their chair as an attempt to humiliatethem in a form to encourage them to be punctual in the future.
Also, time andfreedom were strictly monitored by the use of card keys that keep track ofemployee if they were in the building. And time that was spent outside thebuilding had to be accounted for else without any reasonable explanation, theirsalary would be deducted. This kind of restrain often affects creativity andemployees often feel that there was a lack of trust and respect given towardsthem. One of the recommendation was to have some team bonding session with thestaff and spent time to have a proper understanding amongst everyone. As I am a strong believer of fostering strong communicationwithin a team, ensuring that everyone is on the same page and working toward acommon goal can prove to be vital.
This can be seen in the above case studywhere Lenovo had problems integrating their differences between IBM and due tothis, they incurred a hefty amount of loses. With team building activity andallowing employees to have more freedom to explore more opportunity, freedom tobe accustomed to their culture without being restrained by strict rules andregulation helps in bridging the gap in cultural differences. This will help employeeto feel more appreciated and enhance their productivity. Rather than enforcingone to be accustom to the culture, adding more flexibility in company’sguidelines and code of conduct will benefit in this kind of scenario. Many atimes, we often jump to the root of the problem without understanding the causeof it.
Thus, after boiling down with deep understanding, one can address to itand make necessary changes to improve the situation. Ultimately, what mattersto business owners is often the end-result. And what we often neglect is thewell-being of the employees which are the most important resource in anyorganization.Being in this fastest-changing society wheretechnology predominately plays a huge role in changes in your industry, littlewe realize that some way or another we are part of it. For instance, when we recollectthose days where sending letters out were one of the only ways to communicatewith friends or people abroad, this was slowly replaced by communicatingthrough emails or social media platform such as Facebook.
With these new changes, we ought to eitheradapt or resist. Imagine life or running your business without sending emails. Conventionalletters take ages to arrival and let alone the risk of your letter not beingreceived by the recipient. Do we need to conform to society and peer pressureto adhere to these changes? Does this change give any added value and what arethe impacts? When we encounter the dilemma of the need to change, we need analyzeit in a bigger picture and ask ourselves these questions. Ultimately, progressionis impossible without a change, one who cannot change their mindset cannotchange anything.
