Born in China, serving the world

"Worldsourcing" model helps Chinese PC maker Lenovo deliver on quality, respond quickly to local markets, and control costs.

PC company Lenovo was created in China in 1984, when 11 computer scientists in Beijing had a vision to create a company that would bring the advantages of IT to the Chinese people.

With 200,000 yuan (US$25,000) in seed money, they founded Legend. The company later changed its name to Lenovo, taking the "Le" from Legend and adding "novo", the Latin word for "new".

In May 2005, Lenovo acquired IBM's personal computing division, throwing the company into the global limelight.

Incorporated in Hong Kong, and listed on the Hong Kong Stock Exchange, Lenovo's executive headquarters is in New York. It has principal operations in Beijing and North Carolina, and employs more than 19,000 people worldwide. The company describes this strategic approach to doing business globally as "worldsourcing".

David Miller,
Lenovo Asia-Pacific
Outsourcing is a centralized, top-down strategy designed to save money on non-core operations by handing those operations to a third-party. Worldsourcing, by contrast, is a global, decentralized strategy designed to drive greater value and quality by distributing an organization's core functions across multiple global hubs of excellence.

Lenovo's Asia-Pacific president, David Miller, said worldsourcing allows the company to source materials, innovation, talent, logistics, infrastructure and production, wherever they are best available.

"This means that we can find the most talented and innovative people, the strongest infrastructure, the deepest language proficiency, the finest IT capabilities and the best facilities," Miller told ZDNet Asia in an e-mail interview.

Through worldsourcing, the PC maker merges engineering, cultural and marketing expertise from around the world into one "fluid, borderless enterprise" that is organized around global hubs instead of traditional headquarters.

"Bureaucratic hierarchy is eliminated, resulting in an environment where no single market, culture or management style is given preference, and local decision-making is encouraged," said Miller, who is also senior vice president of Lenovo Group.

Globalized management team
The company's senior management team is a globally dispersed, multicultural group, comprising American, Chinese, Indian and French nationals who are based in China, Singapore, the United States and France.

"Our senior management has a vast array of experience in every market we serve, and they are on the ground where that expertise can serve the company best," Miller said.

Lenovo's global hubs are also located strategically to serve key markets, and where they will function best to deliver more value to customers, he noted.

Quality control

David Miller, Lenovo's senior president and Asia-Pacific president, said controversies involving product quality and safety underscore the importance of protecting consumers in the current globalized world.
Government regulators should take the first step, Miller said. "Beyond government regulation, worldsourcing is a powerful emerging market force that imposes a more potent and far-reaching natural corrective," he added.
"Global companies that worldsource their goods and services are exposed to 'probing lights' and criticism from demanding customers and government regulators in many countries. They must create trust by adhering to the highest standards of governance, transparency, compliance and quality."
Ultimately, consumers will come to recognize they can trust a company behind a worldsourced brand because its attributes are the quality of its goods, services, governance, transparency and corporate social responsibility, Miller said.
"It will be evaluated solely--and will succeed or fail--based on the level of value and quality it delivers to customers worldwide."

"Our hubs serve as centers of excellence for different functions," he said, adding that the worldsourcing model has provided Lenovo with a "truly" 24-hour supply chain with operations spread around the globe.

In procurement, the company taps China, the United States, Taiwan, Japan, Slovakia, Brazil, Scotland, India and Malaysia, to source key parts and materials for its PCs. "Our global manufacturing footprint includes plants in the United States, Mexico, Brazil, Europe, India and China," Miller said. "We brought our manufacturing operations closer to our customer base in these vital markets to serve our customers more effectively and efficiently."

The company also has marketing and customer support hubs in France, Malaysia and India; and research hubs in the United States, Singapore, China and Japan.

Worldsourcing has enabled Lenovo to improve the quality of its products through investment in global research and development (R&D) and design facilities in Japan, the United States and China. Some 1,700 designers, engineers and scientists are based in labs located in Beijing, China; Raleigh, United States; and Yamato, Japan. Together, these research facilities form the company's "Innovation Triangle", Miller said.

"In the global village, time, distance and geography are no longer hindrances for conducting business but a unique opportunity. The world has evolved into one integrated marketplace and manufacturers and service providers no longer create products for a particular region," he noted.

He added that hubs let Lenovo deliver consistent quality and service on a global scale while maintaining the complex infrastructure needed to respond quickly to local market demands. These hubs also allow Lenovo to control costs through close management of budgets and reduction in the duplication of common tasks, he said.