Chapter 5 Some Things Can Be Achieved only by a Truly Global Company
The conditions and growth factors of a global company as exemplified by Lenovo
I said previously that I thought the transfer to Lenovo to be a good bridge. It really turned out to be the case. At first, there were people saying all kinds of things. There was a lot of misunderstanding and concern. Most had to do with whether Lenovo was a truly global company. Some people would say “It’s only a local company from China, isn’t it?”
However, this was a great mistake. We don’t use Americans, Australians, and Europeans just for window displays. Lenovo is a truly multinational company, a global company.
There are all kinds of global companies, but if the country of origin is the complete master and at the top of the hierarchy, and all the other countries amount to no more than markets, that company is not truly global. It may be international, but it is not global. Many companies with operations on a global scale have a management that is clearly lopsided. The internationalization of most of Japan’s large companies used to fit this pattern. Internationalization for most Japanese companies consisted in increasing their multinational portfolio of overseas bases. Japan is not unique in this regard. Multinational companies in Europe and the U.S. are much the same. This type of multinational company considers its own management methods to be the best and simply rolls them out abroad. However, such methods are not necessarily so easily accepted in the many other countries they’ve set up in. Upon realizing this, the company may make a 180-degree change. For instance, Japanese companies are trying to learn Western management methods, while Western companies try to learn Japanese management methods.
It has been said that there are three conditions for a global company. One is that the company must have global operations. Another one is that the company’s management must be diversified and international in character, and that its management methods must also be diversified and multinational. The last is that the company must have a culture that is globally accepted. In other words, the company must not be overly focused on western-style rationalism, or on the holistic Asian style. Put another way, it should be neither too dry nor too wet. More than anything, the company must have balanced openness. A playing field that is level for all is also important.
How does Lenovo fare with these considerations? First and foremost, Lenovo’s management is the very definition of multinational. It has people from various countries, including the U.S., China, Japan, Australia, and France. I think that Lenovo is a very unique company in that it combines culture from the East and West, and it’s not a question of which side is which, but instead, that all sides can clearly speak their minds. In this sense, Lenovo is an extremely fair company that offers a level playing field to all its members. Whether European, American, or Asian, or from one of the developing countries, everybody can work on an equal footing.
The result is that there are many seeds of growth. Lenovo is a company that combines the Eastern spirit with the Western genius, and the Western spirit with the Eastern genius.
Lenovo’s headquarters are in Raleigh, North Carolina, and Beijing, China, but their management style is anything but remote. Executives are distributed in all the right places throughout the world and the real headquarter functions could even be said to exist in virtual space. We call this approach “world sourcing.” I think it’s because its purpose is to quickly bring to the group the seeds of innovation, the talent, the new ways of thinking, and of course the technologies that come into being around the world.
In other words, the company constantly scouts for places to get the best human resources, the best new ideas, and the sources of our next competitive strengths. Lenovo’s management is most definitely on-the-move.
As an example, let’s look at a reporting line, say that of a senior manager of corporate communications at Lenovo Japan. The person in our example is a Japanese woman, but although she is in Japan, her immediate senior is an Australian, who himself reports to a Dutch senior who resides in Paris, France. That person in turn reports to CEO Yang Yuanqing, who himself is Chinese and resides in the U.S., in Raleigh.
This is just one reporting line taken at a given point in time, but it illustrates the degree to which Lenovo’s management has no national borders.
Like I said, Lenovo operates by an on-the-move management style, and they don’t stay put. On the contrary, they actively meet with customers and directly listen to wishes and requests for products. In this particular case, the arrangements are made by the marketing departments, but similar activities are taking place all around the world.
Amid all this, Japan is positioned as an R&D and a manufacturing base, and its market is known as having the pickiest consumers of all, meaning it has a major role to play. However, Japan is a bit down these days. This being a global company with a level playing field, I feel that I personally ought to do a little more, so that Japan too can stand on an equal footing. One initiating factor toward this is, I believe, our tie-up with NEC, which will be discussed later.
At one point, the slogan “Think global, Act local” was popular, but Lenovo is a company that “thinks global and acts global.”
At present, the majority of Japanese companies include “diversity” among their keywords, but at global companies, diversity can be said to be the accepted norm and the normal state.
An attitude toward people for whom English is not their mother tongue that is often seen in Western companies is the assumption that “fluency in English is a given,” and people will shoot off in rapid-fire English at company meetings and so on, oblivious of the non-native speakers who have limited English. The attitude of the native speakers is, “If you can’t understand what I say, it’s your fault.” This extends beyond language, as often such persons will communicate only in their accustomed style. For example, they’ll declare that logical is best and will demand “What’s the conclusion? Please respond in three points.”
Such attitude is negated by Lenovo’s diversity. With our own CEO being a non-native speaker of English, people who do not speak this language natively are also able to participate in management on an equal footing. This extends beyond management, to all other corporate activities. English remains the common language of the company, but everybody can engage in communication in an understanding environment. People will talk to you at an intelligible speed instead of rapid-fire. Beyond language, ours is a deeply ingrained culture of thinking, talking, and seeking to understand by assuming the viewpoint of the other person.
Our approach to operations is similar. Ours is not a culture that embraces a standard way of doing things and condemns any deviations, no matter how slight they may be. This is because we combine firm criteria and processes as a base, with the flexibility to allow for some leeway. We are also passionate about knowledge sharing, and conduct workshops in various fields, including development, sales, marketing, supply chains, logistics, and finance.
People who normally communicate via email or phone will attend a workshop somewhere in the world for a week. Such a workshop typically welcomes between fifty and sixty people from the same division, who come in from all over the world. Cross discussion is the basic format. There is absolutely no hierarchy involved, and the participants are free to bounce off opinions and discuss new ideas together. At such times, if a native speaker of English speaks too fast, people who were unable to catch what was said will not cower but instead simply ask the person to speak more slowly. Whether or not a person is a native speaker of English bears no relation on whether his or her ideas are good or not. Ours is a culture of always being considerate to and respecting of others. We also select and announce best practices at such workshops in order to share that know-how and knowledge.
Lenovo is characterized by flexibility, and such workshops do not follow a fixed schedule. Our personnel evaluation system, knowledge sharing system, and feedback systems, among other things, are naturally fixed, but flexibility is
built into all of them. They are not rigid structures with no latitude at all. They are encompassing systems that value fuzziness. In this sense, they may be called Eastern.
We do not think that once something is decided, it can never be changed, and if something has not been decided, it must be decided without fail. We are constantly evolving. If we think things need to be changed, we rapidly change them. We do knowledge-sharing through workshops and other events. And we share best practices. However, we don’t make them into stereotypes. We don’t create templates and treat them as monolithic points of reference. If people think they can be of use, they are free to make them into templates for local use. If people don’t think they will work out for them, they are free to reject them.
In other words, we understand that common sense can take on a variety of forms.
This can also be put another way. Using the computer industry for illustrative purposes, Japanese companies have been said to have the problem of ignoring differences in operating systems and seeking to introduce middleware and applications with Western specifications at all costs. I think the OS analogy is easy to understand.
What we are after is to create the best possible OS, which represents the core element of the company, by collecting knowledge from around the world and giving all due consideration to diversity.
Moreover, Lenovo maintains an extremely clear performance concept. Bonuses shrink to a surprising degree when business results are poor—so much so that my daughter’s bonus has exceeded mine some years. But when we have strong business results, the company really pays us well! Compared to the surprisingly large number of companies that don’t pay much when performance is poor, and that don’t pay too much either for good results, I find Lenovo extremely fair.
As a matter of fact, Lenovo is a fast growing company. For seven consecutive terms, it has recorded the highest growth rates in the entire PC industry, and with a 10.2 percent share of the global PC market, it is third after HP and Dell (as of the end of June 2011). In the Japanese PC market as well, Lenovo’s growth rate has exceeded the market’s for eight consecutive terms.
To give you some ThinkPad figures, global shipments by units rose from approximately 4 million units in 2004 to approximately 12 million units in 2010, surging up for seven consecutive years. The total number of units shipped by Lenovo continues to rapidly rise, in developed and developing nations alike.
While being a brand attached to global corporations that originated overseas, first IBM and then Lenovo, the DNA of the ThinkPad, which clearly originated in Japan, is recognized throughout the world, and the fact that the ThinkPad’s reputation keeps on growing, especially in this age, is something of which I am truly proud. I would be very happy if this movement could inspire or invigorate Japan, even if just a little.
The launch of NEC Lenovo Japan Group is a very exciting development
In January 2011, Lenovo and NEC announced that they would establish a joint venture company based on a strategic alliance, and along with the creation of the holding company Lenovo NEC Holdings B.V. (registered in the Netherlands) on July 1 of the same year, Japan’s largest PC business group, NEC Lenovo Japan Group, was launched. The new group will have a share of nearly 25 percent of Japan’s PC market, with a strong presence in both the commercial/government sector and in consumer sales.
NEC Lenovo Japan Group is made up of three companies: the joint venture (51 percent held by Lenovo and 49 percent by NEC), and its 100 percent-owned subsidiary companies, NEC Personal Computers Ltd., (newly formed by spinning out NEC’s PC business unit from NEC Personal Products Ltd.), and Lenovo Japan Ltd. (see figure on p. 189). Roderick Lappin, President of Lenovo Japan Ltd., has been named Executive Chairman of the joint venture, while Hideyo Takasu, President and representative director of NEC Personal Computers Ltd., is President and CEO.
Here’s what I said at a meeting with NEC’s people.
“Personally, I strongly feel like I have been fighting a lonely battle all this time. So I am delighted about this collaboration with NEC.”
These words were no idle flattery, they are truly how I feel. If possible, I would like to join forces with the whole of Japan to conduct research and development.
Why is this so? Let me give you an example.
A Yamato lab member says, “This is how it’s done.” To which, an NEC member asks, “Why is that?” This leads to a back and forth exchange between the engineers, demonstrating the degree of like-mindedness between them.
They feel like they’ve finally met someone they can really talk with. The NEC person then asks back, “If we do it like that, won’t we be unable to maximize the graphics performance?” To which our engineer replies, “When we want to do this, it’s designed this way in order to make this setting possible.” “Oh, I see, that’s how this thing is designed.” The conversation just bounces along like that.
What this joint venture means is that we get one more set of people to join in this kind of conversation. This is extremely gratifying—because 1 + 1 equals not 2, but 3 or 5. That’s what synergy is about.
As I wrote earlier, I do not think that M&As can be successful if they do not involve entities that are in a complementary relationship. The case at hand is exactly like that. NEC’s operations target the domestic market. The Japanese market differs from the global market, and NEC has technologies that we need for the Japanese market. NEC has a long history in Japan, as well as an extensive sales network that covers the entire country, and thus should be more attuned to the needs of Japanese customers (particularly individual customers). It’s clear that there is much we can learn from NEC in this regard.
On the other hand, we have more of the skills and know-how needed for a stable supply of PCs on a worldwide basis. This must be attractive to NEC. If we were to liken the Yamato lab to a company, this means that the lab would be delivering the products of Japanese manufacturing to the world using Lenovo’s structure and networks. And NEC too would then be able to use this structure and network. Moreover, in terms of number of PC units shipped, Lenovo is ten times bigger than NEC. Therefore, in addition to gaining access to world markets, NEC will be able to use Lenovo’s scale advantage in terms of materials procurement.
We have different market sector profiles, as NEC’s strength is in the consumer and public sectors, while ours is in large companies. In this regard too, we complement each other well.
Our respective strong fields also differ. I think we can expect great things from that in terms of synergy.
Based on my experience actually meeting with the NEC camp, I am confident that we will not suffer the oft-described M&A hangover, perhaps thanks to our characteristics as fellow engineers.
Of course, setting aside us engineers, the merger of two such large players involves great complexities for the people of the various sections of both companies who are responsible for the practical details of negotiations and procedures. However, when I ask these people about that, they tell me that things are actually rather easy because the two companies have a greater readiness to take in new things compared with other companies. I think this is because our cultures are not about imposing ideas and action but rather always aiming to create something good together.
Higher productivity allows for richer personal lives
The following is about when we started developing the ThinkPad at IBM.
At the time, my fellow engineers and I worked so hard that we’d be asking one another “When was the last time you took a day off?” I even pleaded with my staff, “Please do not come to work on New Year’s Day. Because if you guys come, I’ll have to come too. So I’m asking you, don’t come in on New Year’s Day.” You see, every day except New Year’s Day was a work day back then.
The reason we had to work every day was that, unlike today, we didn’t have email access at home, and so had to go to the office when some announcement would come in or we had to communicate with somebody. So we’d go to work even on Saturdays
and Sundays, and being under pressure from all sides, we worked every day until late at night. That’s what that period was like.
Every day, we’d get back home around 11at night. One person lived near me, so we’d take a taxi together. One day, our taxi almost got involved in an accident with another taxi. The collision was avoided by just a hair’s breadth, and I and my fellow passenger muttered pretty much the same thing at the same time: “It would have been just as well if we’d collided. This way we could have slept in the hospital.”
Naturally, the driver made a face. I fully realize we shouldn’t have said such an improper thing, but at the time, we were dead tired and while what we said was nonsense, that was how we felt. Working that way is nothing to be proud of. I’m not denying that I was a corporate soldier, a workaholic, during that period, but I can no longer endorse such a way of working. I don’t think that Japan would be able to regenerate itself at all in this fashion. This is not the type of effort I expect of people today.
The value of a person cannot be measured in terms of work hours. Productivity is important. We work hard for this purpose. We are dedicated to creating notebook PCs, those professional tools that allow people to raise their work productivity regardless of time and place.
If people were able to read their emails at home, they wouldn’t need to go to the office just for that purpose. If people had a PC at hand, they could just work where they are. And if they made full use of multiple devices, they would be able to use their time even more efficiently.
When people are told that they can work “365 days a year, 24 hours a day,” they all misconstrue this to mean that they can’t rest or should work round the clock. No, what this means is that since they can work anytime, they can use their own time more freely.
A precious Saturday or Sunday will get used up if you have to ride the train all the way to work just to check for and reply to email, even if that one task takes care of work on that day. I think that most people are fed up with that kind of life. If one were able to check one’s emails in the evening or at night and reply as needed, that would be that. It doesn’t even have to be at home. Since notebook PCs and other mobile devices are portable, they can just be taken along. When out on a business trip, or even on a leisure trip, one can easily take out a moment to check one’s email and accomplish some work. Even busy persons would be able to enjoy leisure time if they had a notebook PC with advanced security and wireless functions, or a smartphone or cellular phone. That’s right, everybody would be able to multitask like a “soccer mom”. These tools and technology allow you to make time for your family.
For instance, in Japanese airports, it’s common to see quite a number of Japanese people working on their PC in the lobby. But such activity can hardly be seen on bullet trains. Various factors are behind this, such as houses being too small or wives expressing disapproval when their husbands bring work back home, but even so, by allowing workers to get some work done at home, such tools enable them to spend more time with their family.
“Seisansei,” the Japanese term for “productivity,” suggests productivity like that of a machine. For this reason, I prefer to use the English word “productivity.” It does not have connotations of corporate slavery. On the contrary, it should be about helping people to better design their personal lives.
Work hard against all odds in the beginning; make it all come true in the end
I’m veering off topic a little, but recently there’s something I’ve been feeling unhappy about. And that is, why do the Japanese seek to drag down leaders so much?
The greater the heights a leader ascends to, the more your own world will expand. If you drag down your leader, your own world will greatly shrink. And when that happens in Japan, everybody spontaneously cries out in unison that Japan has gone bad. I think this is a mistake. No matter what the world thinks, we should be confident in ourselves and not drop “great” from the terms we use to describe ourselves.
But the Japanese are a humble people, and it seems that recently Japanese people are putting themselves at ease by intentionally putting themselves down, by badmouthing themselves. Badmouthing Japan, the Japanese, and Japan’s leaders is the same as badmouthing oneself.
To begin with, Japanese humility is a cultural practice that requires that when a person says “I do not amount to much of anything,” the other person protests, “But not at all, what are you saying?” However, no foreigner will accommodate today’s Japanese in such a manner, and the end result is that the Japanese are just putting themselves down, period.
Of course, singing about how great we are won’t do either. I think that it’s important that we start making efforts to pick ourselves up. If we disparage ourselves, we won’t be able to make such efforts. People are able to make efforts when they truly think that they are great. If we try and do our best, we will definitely accomplish what we set out to do. Even if all the odds are against you in the beginning, work hard and make it come true in the end. This is the way I’ve been leading my life.
At times, I’ve used exaggeration, and at other times posturing. But in the end I made it all come true, though of course not on my own only. I’m confident that the Japanese have the needed talent and skills to succeed.
Today, Japan is losing out in various places. Japan’s traditional strengths are all being overtaken by the Western world and Asia. And likewise for flat-screen TVs, digital cameras, cell phones, PCs. I believe that even our position in the automotive industry is at risk.
However, Japan’s technological prowess is still in good shape. And our engineers are motivated. Japan’s economy was, and still is, export-driven. And our exports are not just manufactured goods.
For example, it is my belief that the development capabilities of a global company constitute an export industry. The Yamato lab is an organization that has been and still is funded from around the world to export its output.
This is an age in which categorizing companies as being Japanese, American, or Chinese has become meaningless. Lenovo aims to be a global company. In the same way that Lenovo does not profess to be of any one country, the Yamato lab, though it is located in Japan, is not solely a Japanese organization.
I think that this offers a clue, though not the only one, about how to revitalize the Japanese economy.
Young people are searching for their own playing fields. I believe that one of the selection factors, or judgment criteria, is whether a company is a global company, regardless of its size. The notion of selecting a company based on it being a major corporation or a venture business is already obsolete.
Epilogue
In the end, what we engineers should value the most is imagination. Imagine, and then create.
Imagine not just what we ourselves fancy, but the situations in which users make use of these tools. And then, as professionals, imagine how these tools can be put to use.
Creativity is important, and so is consideration. An eye for observation is crucial as well.
Set goals in this way and then think about how to achieve them. Quantitative data is the process, and the result. Such data is essential for development, but it is not needed for presentations.
Please hit this key.
Please carry it around with you for one day.
Try to do some work next to your sleeping child.
Use this to surf the net.
Experience how you can get by without having to be aware of security.
Move around and try out different things without having to worry at all about how the wireless system changes according to your location.
This may sound like a commercial, but engineers aren’t truly engineers if they can’t ask users to do the above.
Customers don’t like PCs per se, they like what PCs enable them to do. They are not interested in PC screens, they are interested in what’s displayed on these screens. They don’t love keyboards, they like the documents, plans, equations and programs that
they can produce by typing on keyboards.
Thus PCs are definitely not the leading actors. They are just tools. That said, no other tools are as useful.
We will keep on refining these tools, for all.
On an auspicious day in October 2011
Arimasa Naitoh
Arimasa Naitoh
Vice-President, R&D
Lenovo Japan Corporation
Lenovo Group Product Group
Vice-President
Chief Development Officer (CDO）
Lenovo Fellow
1952 Born in Aichi Prefecture
1974 Graduated Keio University, Faculty of Engineering, Department of Instrumentation Engineering
Joined IBM Japan Corporation
1989 Named Director of Development for portable PCs and notebook PCs (ThinkPad)
1994 Promoted to IBM Senior Technical Staff Member
1997 Promoted to Distinguished Engineer
1998 Promoted to IBM Academy of Technology Member
2001 IBM Fellow, Director of Portable Systems
2003 Assigned to IBM (U.S.)’s Personal Systems Group in North Carolina
Named Vice-President and Chief Technology Officer (CTO)
2005 Named Executive Vice-President of Lenovo Japan Corporation
2011 Named Vice-President, R&D, Lenovo Japan Corporation in January
English translation by Chris Nanjo, in
collaboration with Liber Ltd.
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