Reference no: EM132252513

Ubiquitous Differences The functions integrated, headquarters moved, and managerial responsibility was being shared. Yet without a common language and shared values, it would be impossible to form a unified, global management team. A year before the acquisition, Lenovo had launched a major campaign to improve the English language skills of its managers and employees. Most of the company's senior Chinese executives could speak some English, though not all were able to doso fluently or with sufficient ease to support effective working relationships. Few of the lower-level managers were fluent in English. Of the IBM managers, virtually no one had even rudimentary knowledge of Mandarin. These immense language barriers led to lengthy meetings and frequent misunderstandings. For example, one of the most senior executives did not speak English, so board meetings had to include a translator. Yet the company determined that English would be its corporate language. The language barriers seemed obvious from the start; less apparent were the widely divergent preferences regarding communication styles. Especially tricky were conference calls, which offered no visuals to help participants interpret the true meanings and nuances of others’ verbal comments. Bill Matson, the HR Director of Lenovo, observed: “IBM leaders would do most of the talking and the Lenovo leaders would do most of the listening. The Chinese, and Asian cultures in general, are much more silent in a conversation. They first think about what they want to say before they say it. And if you think about what you want to say before you say it, and you also translate it from your native language into English … you can understand that a 5 second or a 7 second gap in a conversation is not a long time. Yet, to a Western person, 5 seconds silence in a conversation seems like an eternity. So, often times what you would see in meetings is that the Western leaders would be filling in thegap in conversation, and therefore would dominate these discussions, and all too often would not spend as much time as they probably should have seeking out the perspectives and experiences of their Lenovo colleagues”. These differences in communication style were not just frustrating; they affected decision-making and problem-solving quality. Therefore, the company established a culture integration committee and instituted several programs, designed to overcome such barriers. The “East Meets West” program taught the company’s global executives about the foundations of both Chinese and American cultures. The “Lenovo Expression Workshop” targeted the Chinese managers— typically, pragmatic, hands-on people who were not strong communicators, according to Western standards. One Chinese manager explained, “When Chinese people talk, we start from the background, and then we … talk about the present situation and the challenges that we are facing, and then we gather lots of supporting materials, so at the end we say ‘ok, this is our proposal.’ I guess this is different from what you call the Western approach: You have an executive summary at the very beginning, basically you tell what you want to tell on the first page”. The program coached Chinese executives in Western communication and presentation styles, with the ultimate goal of facilitating mutual under-standing and helping the staff members collaborate more effectively. Beyond these differences, the variance in cultural norms and values became something of an issue; the United States and China can be worlds apart, both literally and figuratively. In particular, their attitudes toward hierarchy and authority are widely divergent. As one former senior IBM executive observed, “Lenovo was a more hierarchically driven company…. You didn’t challenge authority quite as much, and the leadership was certainly revered.… In IBM, youare probably a bit more process oriented, a culture that is a bit more accepting of challenges and bottom-up kind of thinking”. Another former IBM manager was surprised to receive, during his first meeting with his Chinese counterpart, gifts of a cell phone and a portable music player. He also noted a significantly greater level of attention to detail by his new Chinese colleagues. For the American managers, these differences were notable; for the Chinese delegates, they often verged on offensive. For example, Yang and several other Lenovo executives arrived at John F. Kennedy International Airport in New York for their first planning meeting and found no representatives of IBM waiting to greet them. In China, any such high-ranking guests would have found not only counterparts at the airport to greet them but also a limousine to whisk them away to their hotels. The potential for offense was mitigated somewhat by the commonalities in the corporate cultures—both sides shared strong beliefs in innovation, personal responsibility, and responsiveness to customer needs. Both sides also talked about the need for commitment. However, on this topic, the interpretations were rather different: “in Lenovo, planning be-fore you pledge, performing as you promise, delivering your commitment is really deeply ingrained in the culture. And when people sign up for a plan, they execute it. And that was probably not as effectively implemented in the old company [i.e., IBM’s PC Division] that we bought”. These ubiquitous differences were not limited to the relationships between the two companies; they also influenced customer relationships. The deal had been tailored to minimize disruptions and offer service as usual to customers, but some refused to work with the new entity. The U.S. State Department, citing fears of spyware in Lenovo computers, altered its use of some 14,000 PCs it had ordered from Lenovo. The bias against the Chinese company also reared its head in some former IBM sites; in Japan, the former IBM staff fiercely resisted the idea of Chinese ownership. The Japanese design team in particular expressed deep concerns about any attempts to change the look or feel of ThinkPad notebooks—a design inspired by a Japanese lunch box that had remained unchanged since 1992. Leadership A year into it, the “new” Lenovo could look back on some major achievements: It had launched its operations and brand in more than 65 countries, without any major disruptions to deliveries and support. No mass exodus of customers had occurred, as some had predicted. It managed to retain 98% of its employees. And it had gained global market share, including in BRIC countries, making it theworld’s third-largest PC manufacturer, behind Dell and HP. Then, in December 2005, the sceptics felt a sense of vindication, because something had to be wrong: The American CEO Steve Ward resigned. Why did Ward last only eight months? Some guessed a personality clash with Yang Yuanqing—a man 10 years his junior who embraced a completely different style. Others speculated that Ward had been too accustomed to the “IBM way” and could not adapt to the new culture. Perhaps his departure marked the end of a power struggle between the Lenovo and former IBM executives, won by Yang. No one outside the company’s top management team knew the answer for sure, which kept observers buzzing. Whether the IBM deal would help Lenovo become the global market leader in the PC industry remained uncertain, but this incident certainly raised questions about Lenovo’s ability to build a strong multinational management team and successfully run a global business.

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