How Lenovo mixed eastern and western cultures to take a Chinese firm global
Ten years after taking on IBM's PC business, Lenovo HR chief Gina Qiao said the company has meshed its eastern and western workforces to create a global culture that is being shaken up again, with the company now focused on mobile.
Chinese companies are on the rise. Firms like Lenovo, Huawei, and Xiaomi are no longer in the margins of the tech sphere; they are in every sector, from PCs to enterprise solutions, to mobile, and are quickly turning into important players in this ever-shifting market.
Among the three, Lenovo is the oldest and was the first to go global, both in terms of where it was shipping its goods and in relation to recognition abroad. The IBM PC business acquisition in 2005, then described mockingly by some as "a snake swallowing an elephant", put the firm front and centre.
The snake must have digested the elephant well, because Lenovo has since transformed itself to the number one mover of PCs over more seasoned rivals such as HP and Dell. It is now integrating its two recent acquisitions: IBM's x86 server business and Motorola.
What allowed Lenovo to stay ahead of the pack, and other Chinese firms, was the new company culture mostly born out of the experience of the IBM PC business merger, said Gina Qiao, senior vice president of human resources, Lenovo Group. Qiao said the culture is one that fully merges, or at least strives to, the cultures of West and East without one domineering over the other.
Bridging the East-West gap
Reminiscing about 2005, Qiao said the company initially focused on integration with IBM after the deal, as any other firm would after a merger.
"When we started the journey, we started off by planning how to define strategy, product, and innovation, as well as how to retain employees," the senior vice president said.
An initial analysis of both companies showed that the two firms shared similar values and work culture, at least on paper, which raised hope that the integration would proceed smoothly.
It was not so. Misunderstanding hampered meetings between Lenovo old-timers and new folks from IBM.
Processes slowed. After two years of frustration, Lenovo realised that it wasn't strategy or product that needed discussing. It was the culture -- and the foundation for culture was trust.
"We had people now from different countries, different backgrounds, and who spoke different languages," Qiao said. "Easterners tend to be quieter, humble, and mull over before saying something. Westerners tend to be more open, direct, and love to share. And when they share, they want feedback right away," she said.
In meetings, these differences bred misunderstandings between employees, hampering trust and the ability to build a new culture.
Horns were also locked over the different wage systems. To Qiao's surprise, IBM had higher base pays and lower bonuses, while Lenovo had low base pays and high bonuses that depended on the market situation. It didn't help in smoothing out the differences between Lenovo and IBM.
At the time, IBM's so-called "meeting before the meeting" surprised Lenovo's execs. The American style of the presenter meeting face-to-face with individual attendees to settle on issues beforehand so that in the actual meeting everything will be settled cleanly was surprising to the Chinese. Qiao said in China there were no such practices, and that the actual meeting was where the discussions to settle issues started off.
"So we brainstormed and made new common rules. We started asking the Americans to speak more slowly, while encouraging Chinese to voice their opinions," said the senior vice president.
Talking slowly and voicing opinion is now a general rule for all. Pre-meeting information and issues are always shared 24 hours beforehand. Case by case, Qiao and the human resources team addressed individuals to be more understanding of each other.
Since the implementation, communications smoothed, and work began to be completed. In the process, it finally allowed Lenovo to look at strategy, product, and innovation.
Seven to eight years have passed since Lenovo actively worked to break down the cultural barriers, and the results are "noticeably better", Qiao said. "It was not one day of work. It takes a long time. It is still ongoing."
Trust was built, and an open-mind culture developed thereafter, she said.
Lenovo's naming of regional mangers also shows its open culture practices. For instance, compatriot Huawei usually chooses Chinese execs to head regional branches abroad. However, Lenovo always chooses a local exec from the specific country to head the operation.
"I can't say Lenovo is top one, two, or three, but I think [as a result of the culture change] Lenovo is among the top global companies. Today, if you visit China, America, India, Italy, or Korea where Lenovo has a branch, you will realise this is not a company where the Chinese culture is dominant. Back when the merger happened, and we began to change our culture, I would say we were below average. But now we are near the top."
Learn your 'ABC's
Though English literacy is high in the Chinese business world, it seems to not be so in the mainland. Starting from the airport to the hotel, I had difficulty finding my way, as no one seemed to speak or understand English. Gesturing and pointing my way to cab drivers and bystanders, I finally arrived at Lenovo's office in Beijing. Then it got much easier. Though fluency differed slightly for each person, it seemed everyone with a Lenovo ID lanyard around their neck spoke English well.
Qiao didn't speak English 10 years ago. Translators were in meetings to help discussions with American execs. The language bothered her, but more than that, it was about the etiquette, manner, and culture that came with the language. Wrong impressions existed between different employees.
Lenovo was recruiting people from diverse backgrounds, not just dealing with IBM. People from Dell, HP, Microsoft, and Acer were being recruited to drive the company forward in the mid-2000s.
"The way to communicate differs between language, and so it was so hard for me to say, 'I disagree' politely. So many of my Americans thought I was very rude," she said with a laugh. "So through the process of working together with different people, now I say 'I partially agree' or 'this part I agree'."
The Chinese environment, at the time, was generally not English-friendly. Chairman and CEO Yuanqing Yang decided at the time that for Lenovo to become truly global, English must be the official language of the company. Documents written in Chinese were changed to English. Qiao herself is now a fluent speaker of English.
Breaking the hierarchy
Even before the IBM deal, in the early 2000s, Lenovo was attempting to break from a Chinese culture to a more global one.
Employee titles posed the most problem. In Western culture, people generally address each other by their first names. But in Eastern culture, at work, employees are referred to by their title. For instance, seniors are referred to by their last name, followed by the Chinese word zhong, which means boss. Chairman Yang decided to get rid of this practice.
"With the formal titles, people feel like there is hierarchy. You feel like you have to listen and follow. It doesn't help creativity," said Qiao.
To make sure the change was enforced, Yang made all the senior execs wear name tags with only their given name written. Then they would stand at the gates of the company, and require every employee that passed by to say their names without the titles.
"Employees used to turn red and choke before they could call senior execs by their names instead of title, because they were their seniors and it is rude in Chinese culture," said Qiao. Now, Chairman Yang is affectionately called "YY" by employees.
It was a difficult change, as it was so out of place in China. Once, several years ago, Qiao appeared in a TV interview in China. During the interview, the senior vice president referred to the chairman as YY, as she was wont to. One of Qiao's aunts watched the interview in dismay. The aunt gave Qiao's parents an angry call, saying that they should educate their daughter and teach her respect.
The usage of titles also differs from rivals Huawei and Xiaomi. Even Xiaomi CEO Lei Jun, who is known for his passion for jeans and seems casual enough, is referred to as Lei-zhong by employees.
Changing culture from PC to mobile
Lenovo is today gearing up to change itself yet again. Instead of focusing on just PCs, the company has divided its business into mobile, PC, and enterprise segments, following the acquisitions of the IBM x86 server business and Motorola.
The world's largest PC maker has bridged the East-West gap, chosen English for its official language, and rid itself of formal work titles.
"I think today if you are a local leader capable only in one given country, you cannot work in Lenovo. If you meet our regional managers and our leaders, you know they are open minded." said Qiao.
The challenge ahead is to change the PC-oriented culture to a diversified one, focusing on mobility, the senior vice president said.
"If the PC market was still going fast, we wouldn't have to change our culture again," she said. "In PC, it was more about the hardware, and the operating system was all Windows. But in mobile, it's the software, especially the UI, and creativity and innovation is more important than speed."
But the senior vice president is optimistic that the integration of the Motorola and IBM x86 server business will go smoothly, thanks to Lenovo's experience with IBM's PC business.
"Ten years ago, it was so difficult for the company and me personally. But the experience of those times has prepared Lenovo and me for the ongoing integration."
Qiao has been with Lenovo since almost the beginning, having worked there for 25 years.
"I have seen the whole journey. I've seen all the stages. I started off as an introverted, unambitious young woman. I am surprised at where the company is today and me personally."
With the confidence from past success, Lenovo is gearing up for another evolution.
"Lenovo is better positioned than it was 10 years ago, but the challenge is still there. But we have a strong core. And I believe the core is still culture. Some may disagree and say it's the strategy or branding, but I believe it is culture that drives forth a firm," said Qiao. "I hope we grow in the next 10 years as much as we did for the past 25 years."